Examples for expected value

1
Examples for expected value
A game costs 2.00 to play. You toss a coin. If
it turns up heads, you win 3.00 if it turns up
tails, you win nothing. What is the expected
value of this game?
Using the formulaEV(.5)(3-2)-(.5)(2) EV
.5(prob of winning) 3-2 (amount you will win) -
.5 (prob of losing) 2 (the amount you pay to
play)EV.5 - 1EV-.5You will expect to lose
.50 each time you play. Any time you have a
negative expected value, you will lose over time
2
A jar contains 10 marbles. There are five red,
three blue, and two yellow. The game costs 2.00
to play. You draw one marble from the jar. If it
is red you win 1.00, blue you win 2.00, and
yellow you win 5.00. Should you play this game?
EV payoff for red payoff for blue payoff for
yellowEV 5/10 (1-2) 3/10 (2-2) 2/10 (
5-2)EV -.5 0 .6EV .1You can expect to
win .10 for each game. This is a winning game
over time.