This problem was presented in a philosophy class. I don't have much prob/stat background, so I want to make sure I understand it correctly.
I did some googling and found this resource on Expected Utility:A game at a casino consists of the following:
- You roll a dice.
- If it lands on a 6, then you win $60.
- Otherwise, you lose $12.
What is the expected utility of agreeing to play this game?
Based on that Theorem, here is what I have done:If there is a chance of and a chance of , then
Plug these values into
Then we have
So, based on that formula the expected value would be zero. So you don't stand to gain anything by playing.
Is that correct?