You are a contestant on a game show called “Bargain or No Bargain.” You are presented with three briefcases, which contain rewards of $700,000, $1,000, and $100. The host of the show says you can either open one random case and keep the amount inside, or you can accept a guaranteed award of $240,000. What is the mathematically correct decision, and why?
A.
Take the $240,000, because it is greater than the expected value of the briefcases.
B.
Choose a briefcase, because the expected value is greater than $240,000.
C.
Choose a briefcase, because the expected value is less than $240,000.
D.
Take the $240,000, because it is less than the expected value of the briefcases.