# Thread: Should I take the bet

1. ## Should I take the bet

HI I am trying to get my head around odds maybe someone can explain it better.

here is a example a person writes down a number one to 5 and bets $5 against your$1 that you cannot guess the number, should you take the bet?

now the answer is yes because you are getting $5 to$1 on a 4 to 1 proposition shouldn't this be 5 to 1 ? so it is a even bet so there is no point of betting?

Thanks
Jeremy M. Smith

2. so, the outcomes are as follows:

You get $6 with probability 0.2 You get$0 with probability 0.8

Expected payoff = 0.2*6 + 0.8*0 = 1.2

So on average, you are getting $1.2 back for every$1 you put in, and you should take this bet.

I assume you are treating this as a statistics problem rather than an economics problem. If you are studying this in the context of an economics course the answer depends on how risk averse you are.

3. I am trying to work it out in the sense of poker it was a example in a book. my head is spinning lol.

I can't get my head around it. I lose 4 out of 5 times I still have to put my 5th dollar in to win the 5th time and he is given me 5 dollars. So arn't I laying $5 to win$5 ?

4. OK there was a mistake in my answer.

I assume you are saying
If you win he gives you $5 if you lose you give him$1

So, the average payoffs are:
(0.8 * -1) + (0.2*5) = \$0.2

So, you should take the bet.

5. yea I think I read the question wrong lol thanks heaps