Wilson is watching two different roulette-type games at a local charity bazaar.Each game costs $1.00 to play.In one game there are ten different numbers,and if the number he selects comes up,he will win $12.00.In the other game there are 100 different numbers,but if the number he selects comes up,he will win $50.00.Based on expected value theory,Wilson should
A) play the second game because it has a higher expected value.
B) play either one of the games because they both have the same expected value.
C) not play either game because they both have such low odds of winning.
D) play the first game because it has a higher expected value.

Question

Quizplus · Accepted Answer

To find the expected value of each game, we need to multiply the probability of winning by the amount won and then subtract the cost of playing the game. Let's calculate the expected value of each game:

In the first game with 10 numbers, the probability of winning is 1/10. So the expected value is:

(1/10) x $12.00 - $1.00 = $0.10

In the second game with 100 numbers, the probability of winning is 1/100. So the expected value is:

(1/100) x $50.00 - $1.00 = $0.49

Therefore, the second game has a higher expected value and Wilson should play the second game.

Wilson Is Watching Two Different Roulette-Type Games at a Local