A game has an expected value to you of $1000. It costs $1000 to play, but if you win, you receive $100,000 (including your $1000 bet) for a net gain of $99 comma 000. What is the probability of winning? Would you play this game? Discuss the factors that would influence your decision.

0.2% or 0.002

Step-by-step explanation:

If X is a random variable then expected value of X is represented by E(X) which is given as:

where means observation and is the probability of the observation.

Let if probability of winning is p

then probability of losing is 1-p

If the bet (of $1000) is win, then net gain is $9900

If bet is lose, then it means loss and loss in this case will be -100.

Thus, the expected value of the game is = E(X)=$100.

According to above discussion we get the following as probability distribution:

For probability=p, the value of is 9900

and for probability= 1-p, the value of is -100

Probability of winning is 0.002 or 0.2%

Although probability of winning is very low but the expected value is positive that is why we should play the game.

If we assume this game to be an experiment, the random variable X will have outcomes as winning amounts, and its expected value thus represents the expected average winnings of the game.

The expected value of this game is positive so I would play this game.

87%

step-by-step explanation:

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