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For what values of p and q does lottery x dominate lottery y

1 Answer

3 votes

Final answer:

Lottery X dominates lottery Y when the expected value of X is greater than the expected value of Y.

Step-by-step explanation:

In order for lottery X to dominate lottery Y, the expected value of lottery X must be greater than the expected value of lottery Y. The expected value of a lottery is calculated by multiplying the probability of each outcome by its associated value and summing them up.

Let's assume that lottery X has a probability of winning p and a payoff of P, and lottery Y has a probability of winning q and a payoff of Q.

In this case, the expected value of lottery X is: E(X) = p * P.

The expected value of lottery Y is: E(Y) = q * Q.

For lottery X to dominate lottery Y, E(X) must be greater than E(Y): p * P > q * Q.

Therefore, in order to determine the values of p and q that make lottery X dominate lottery Y, you would need the specific probabilities and payoffs associated with each lottery.

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