Question 441589: A game is said to be "fair" if the expected value for winnings is 0, that is, in the long run, the player can expect to win (or lose) $0. Consider the following game. The game costs $1 to play and the winnings are $5 for red, $3 for blue, $2 for yellow and nothing for white. The following probabilities applyl. What are your expected winnings? Does the game favor the player or the owner?
Outcome Probability
Red .02
Blue .04
Yellow .16
White .78
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! A game is said to be "fair" if the expected value for winnings is 0, that is, in the long run, the player can expect to win (or lose) $0.
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Consider the following game. The game costs $1 to play and the winnings are $5 for red, $3 for blue, $2 for yellow and nothing for white. The following probabilities applyl. What are your expected winnings? Does the game favor the player or the owner?
Outcome Probability
Red .02
Blue .04
Yellow .16
White .78
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E(x) = 0.02*4 + 0.04*2 + 0.16*1 + 0.78*(-1)
= -0.46
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Game favors the owner.
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Cheers,
Stan H.
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