question archive Suppose you enter a contest where your probability of coming in first place is 0
Suppose you enter a contest where your probability of coming in first place is 0
Subject:StatisticsPrice:2.86 Bought3
Suppose you enter a contest where your probability of coming in first place is 0.12 and your probability of coming in second place is 0.28. If you come in first place, you win $69. If you come in second place, you win $22. If you don't come in first or second place, you have to pay $56. What is the expected value of this game?
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1st Place: P(1st) = 0.12 | Gain = $69
2nd Place: P(2nd) = 0.28 | Gain = $22
Not 1st or 2nd: P(not 1st or 2nd) = 1 - 0.12 - 0.28 = 0.60 | Loss = $56
Expected Value = ∑[xi*P(xi)] = 0.12*69 + 0.28*22 - 0.60*56
Expected Value = -19.16
