3 ms·

So your expected value is $200K. You should buy.

• saosebastiao 13y ago
  I'll offer you a game: A fair coin, heads you win $2^n (where n is the number of coin flips) and get another coin flip, tails you pay me $1,000,000 and get no more coin flips. There are bounds to the rationality of expected value theory.
  • alste780 13y ago
    I don't understand. In your game, my expected value is very bad (negative). So I wouldn't play it.
    • saosebastiao 13y ago
      Incorrect. In my game, the expected value is infinitely good. You just have to keep flipping heads consecutively. The break even is after 20 consecutive heads.
      • 3pt14159 13y ago
        No, you misunderstand mathematics. Just as 1 + 1/2 + 1/4 + 1/8 + ... only equals 2, the odds of break even is not at 20 consecutive heads. The expected values are as follows: See this gist: https://gist.github.com/zachaysan/7603526 https://gist.github.com/zachaysan/7603526