STATS – Suppose you go to a casino with exactly 63 dollars

| August 30, 2017

Question
Suppose you go to a casino with exactly 63 dollars. You play a game wherethe probability of winning is 1/2. You have the following strategy:First, you bet 1 dollar if you win, you leave with 64 dollars.If you lose you bet 2 dollars. If you win you leave.If you lose you bet 4 dollars. You then continue this pattern, if you win you leave, if youlose you bet twice your last bet, until you have no more money.Let Y equal the amount of money you take home. Compute pY (y) and E[Y ]. Would you play this game everyday?

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