Question

Two coins are flipped. You win $3 if either two heads or two tails turn up; you lose $4 if a head and a rail turn up. What is the expected value of the game?

Answer 1

Explanation:

It's too bad about this problem. It's a fair game if you get paid the same amount that you have to pay if you lose.

You win 2 ways

• H - H
• T - T
• Probability 1/2

You lose 2 ways.

• H - T
• T - H
• Probability 1/2

Expectation

E = 1/2 * 3 - 1/2 * 4

E = 1.5 - 2

E = -0.5

Which means that you should expect to lose 0.5 dollars every time you play this dreadful game.