Page 1 of 1
(b) Consider the following strategy for betting. I start by betting $1; if I lose, I double my bet to $2, and if I lose
Posted: Wed Dec 15, 2021 10:34 am
by answerhappygod
- B Consider The Following Strategy For Betting I Start By Betting 1 If I Lose I Double My Bet To 2 And If I Lose 1 (42.75 KiB) Viewed 93 times
(b) Consider the following strategy for betting. I start by betting $1; if I lose, I double my bet to $2, and if I lose I double my bet again. I continue to double my bet until I win. Suppose further that the probability of winning each game is p=0.5. This strategy results in a guaranteed net win of $1. = Let X be the amount of money bet on the last game (the one I win). i. Determine the probability mass function for X. (6 marks) ii. Show that E(X) = 0. That is, the expected value of X is not finite. (4 marks) iii. Comment on what is wrong with this strategy. (2 marks)