Emilie is presented the following gamble: one door has $100 behind it,another has $20 behind it,and another has $0 behind it.What is the expected value of this gamble?
A) $120
B) $40
C) $20
D) $60
E) Answer requires more information.

Question

Quizplus · Accepted Answer

The expected value of the gamble is the sum of each outcome multiplied by its probability. Assuming each door has an equal chance of being chosen, the probability of getting $100 is 1/3, the probability of getting $20 is 1/3, and the probability of getting $0 is 1/3.

Expected value = (1/3)($100) + (1/3)($20) + (1/3)($0) = $40

Therefore, the best choice would be to choose the door with the $40 expected value.

Emilie Is Presented the Following Gamble: One Door Has $100