Answer to Question #41959 in Math for Shashi Shekhar Sharma

Question #41959
Consider a purely probabilistic game that you have the opportunity to play. Each time you play there are n potential outcomes x1, x2, ..., xn (each of which is a specified gain or loss of

euros). These outcomes x1, x2, ..., xn occur with the probabilities p1, p2, ..., pn respectively (where p1 + p2 + ... + pn = 1.0 and 0 <= pi <= 1 for each i).

Positive xi values mean a gain of |xi| euros and negative values mean a loss of |xi| euros. Assume that x1, x2, ..., xn and p1, p2, ..., pn are all known quantities. Furthermore, assume that each play of the game takes up one hour of your time, and that only you can play the game (you can't hire someone to play for you).

Let M be the game's expected value. That is, M = p1*x1 + p2*x2 + ... + pn*xn. Let S be the

game's standard deviation. That is, S = SquareRoot( p1 * (x1 - M)^2 + p2 * (x2 - M)^2 + ...

+ pn * (xn - M)^2 ).

1) In the real world, should a rational player always play this game whenever the expected value M is not negative? Yes/NO Explain please...
1
Expert's answer
2014-05-02T07:25:57-0400
The answer to the question is available in the PDF file https://www.assignmentexpert.com/https://www.assignmentexpert.com/homework-answers/mathematics-answer-41959.pdf

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

No comments. Be the first!

Leave a comment

LATEST TUTORIALS
New on Blog
APPROVED BY CLIENTS