Answer:
The value is [tex]X = 0.1719 [/tex]
Step-by-step explanation:
From the question we are told that
The entry fee is [tex]a = \$ 11[/tex]
The outcome for first place is [tex]b = \$ 58[/tex]
The outcome for second place is [tex]c = \$ 48[/tex]
The outcome for losing is [tex] d = - \$ 11[/tex]
The chance of finishing in the top two is X
Given that there are equal chance of finishing first or second, then the chance of finishing first is [tex]\frac{X}{2}[/tex]
and the chance of finishing second is [tex]\frac{X}{2}[/tex]
Then the chance of losing(i.e not finishing in the first two) is [tex]1 - X[/tex]
given that the game is a fair gamble for the player as an expected maximizer then it mean is that the expected value of entering the tournament E(X) = 0
So
[tex]E(X) = b * \frac{X}{2} + c * \frac{X}{2} * d * ( 1 - X)[/tex]
=> [tex]0 = 58 * \frac{X}{2} + 48 * \frac{X}{2} * -11 * ( 1 - X)[/tex]
=> [tex]0 = \frac{58X}{2} + \frac{48X}{2} * -11 + 11X)[/tex]
=> [tex]X = \frac{64}{11}[/tex]
=> [tex]X = 0.1719 [/tex]
