1.7 lecture07 - STAT 1301 Probability Statistics Lecture 7...

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1 STAT 1301 Probability & Statistics L t 7 Lecture 7 21 Blackjack "21" is the fact-based story about six MIT students who were trained to become experts in card counting and subsequently took Vegas casinos for millions in winnings. Gambler’s Ruin Problem Two gamblers, A and B , bet on the outcomes of successive flip of a coin. On each flip, if the coin comes up heads, A collects $1 from B , whereas if it comes up tails, A pays $1 to B . They continue to play until one of them runs out of money. Assume that the flips are independent and each flip results in a head with probability p =1/2, what is the probability that A ends up with all the money if he starts with $5 and B starts with $10? Discrete and Continuous Random Variables
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