This is gamble 1: do you prefer a sure win of $5 or a 75% chance to win $8? This is gamble 2: in the first stage, you have an 80% chance to end the game with no prize and a 20% chance to move to the second stage. Before completing the first stage, you must select one of the following second-stage choices: do you prefer a sure win of $5 or a 75% chance to win $8? This is gamble 3: do you prefer a 20% chance to win $5 or a 15% chance to win $8? Which two of the preceding gambles are identical?
A) gamble 1 and 2
B) gamble 2 and 3
C) gamble 1 and 3

Question

Quizplus · Accepted Answer

Gamble 2 and 3 are identical because in both cases, the overall probability of winning the respective amounts ($5 or $8) is the product of the probabilities at each stage, resulting in a 20% chance to win $5 or a 15% chance to win $8.

This Is Gamble 1: Do You Prefer a Sure Win