1) What is the expected value of the following gamble? You are to roll a pair of dice. If the dice come up on a natural, 7, or 11, you win 10 dollars. If the dice come up snake-eyes, 2 or box cars, 12, you lose 20 dollars. Otherwise the bet is off.
1) What is the expected value of the following gamble? You are to roll a pair of dice. If the dice come up on a natural, 7, or 11, you win 10 dollars. If the dice come up snake-eyes, 2 or box cars, 12, you lose 20 dollars. Otherwise the bet is off.
The expected value is the value multiplied by the probability of the event. Then you must sum over all events in the sample space.
Since the value of the other events is zero they do not need to be summed over.