Suppose that,in an experimental setting,100 students are asked to choose between Gamble A and Gamble B,where: Gamble A: The student will receive $5,100 with a 70% probability and $200 with a 30% probability.
Gamble B: The student will receive $5,100 with a 50% probability,$200 with a 25% probability,and $0 (nothing) with a 25% probability.
What is the expected value of Gamble B?
A) EV = 0.7
($5,100) + 0.3
($200)
B) EV = 0.5
($5,100) + 0.25
($100) + 0.25
($25)
C) EV = 0.5
($5,100) + 0.25
($200) + 0.25
($25)
D) EV = 0.5
($5,100) + 0.25
($200) + 0.25
($0)
E) EV = 0.5
($2,600) + 0.25
($2,600) + 0.25
($0)
Correct Answer:
Verified
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