Scenario: Your friend and you decide to bet on a baseball game. You offer to pay $200 if you lose the bet, and your friend has to pay $100 if you win the bet. The probability of your winning or losing the bet is $ \frac{1}{2} $ .
-Refer to the scenario above.Suppose the amount that you receive on winning the bet is increased to $300.Which of the following statements is true?

Question

Quizplus · Accepted Answer

With the increased amount that you receive on winning the bet, your expected value of the bet will be:

E(x) = (0.5 * $300) - (0.5 * $200) = $50

Since the expected value is positive, it means that on average, you will receive $50 from the bet. Therefore, it is beneficial for you to take the bet.

Scenario: Your Friend and You Decide to Bet on a Baseball