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  • Expected Value

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    ssaride
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    A raffle sells 1000 tickets for $2 each, with a grand prize of $800 and two $100 consolation prizes. Jeremy buys 1 ticket. His expected value is calculated as the cost (-$2) plus the weighted probabilities of winning each prize, which equals -$1, so he is expected to lose $1 on average.

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    A raffle sells 1000 tickets for $2 each, with a grand prize of $800 and two $100 consolation prizes. Jeremy buys 1 ticket. His expected value is calculated as the cost (-$2) plus the weighted probabilities of winning each prize, which equals -$1, so he is expected to lose $1 on average.

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    69 views1 page

    Expected Value

    Uploaded by

    ssaride
    A raffle sells 1000 tickets for $2 each, with a grand prize of $800 and two $100 consolation prizes. Jeremy buys 1 ticket. His expected value is calculated as the cost (-$2) plus the weighted probabilities of winning each prize, which equals -$1, so he is expected to lose $1 on average.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 1

    . One thousand raffle tickets are sold for $2.00 each.

    One grand prize of $800 and two


    consolation prizes of $100 each will be awarded. Jeremy purchases one ticket. Find his expected
    value. Show your work for full credit.

    EV = cost + sum(prize*probability)
    EV = -2 + 800 * 1/1000 + 100 * 2/1000
    EV = -1

    The expected value is -$1.00. He is expected to lose a dollar.

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