Question

If you have a 1 in a thousand chance of winning $400, but 999 out of a thousand times you win nothing, what is your expected payoff​

Answer 1

$0.4

Explanation:

Answer 2

Answer:$0.4

Explanation:

Let
`P_(w)` be the probability of winning.

Let
`P_(l)` be the probability of loosing.

Given that we win once in thousand times.

So,
`P_(w)=(1)/(1000)`

Since
`P_(w)+P_(l)=1`

`P_(l)=1-P_(w)=1-(1)/(1000)=(999)/(1000)`

Since we win noting if we loose,

expected payoff is product of probability of winning and the prize.

Let
`pr` be the prize.

Given,
`pr=400`

Expected payoff is
`pr* P_(w)=400* (1)/(1000) =0.4`

So,$
`0.4` is the expected payoff each time.