Homework 6 Solution

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Unformatted text preview: y likely outcomes. The probability of choosing the right one is 1/10,000 or 0.0001. The probability of choosing the wrong one is 9999/10,000 or 0.9999. The EV per play is 0.9999(- $1)+0.0001($4999)=- $0.50. 13) EV of 1- point option: 0.94(1) + 0.06(0)=0.94 EV of 2- point option: 0.37(2) + 0.63(0)=0.74 Based on just the probabilities, it’s a better idea to go for 1- point, but because of how the scori...
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