Question

Suppose you enter a contest where your probability of coming in first place is 0.37 and your probability of coming in second place is 0.33. If you come in first place, you win $56. If you come in second place, you win $36. If you don't come in first or second place, you have to pay $52. What is the expected value of this game?

Answer 1

Answer:

It's expected to win $17 in this game

Step-by-step explanation:

The expected value for a probability distribution is given by

$E(x)=\sum x_iP(x_i)$

In this problem, the set of x is  

x={$56 , $36 , -$52}

Which have the respective set of probabilities:

p(x)={0.37 , 0.33 , 1-0.37-0.33 }={ 0.37 , 0.33 , 0.3 }

$E(x)= 56(0.37)+ 36(0.33)- 52(0.3)= 17$

It's expected to win $17 in this game