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Consider the following gamble. A standard pack of playing cards, including 26 red cards (diamonds and hearts) and 26 black cards (spades and clubs), is shuffled, and the card on top of the deck is turned face up. If the face-up card is red, the gambler wins $11 If the face-up card is black, the gambler loses $9. Expected value theory predicts which of the following?
a) Most people will accept the gamble
b) Most people will reject the gamble
c) People will be equally likely to accept or reject the gamble

Respuesta :

annyksl

According to the expected value theory, most people will accept the bet, as shown in option A.

We can arrive at this answer because:

  • According to the expected value theory, the probability of something happening is calculated as the sum of the product of each situation, by its respective value.
  • Therefore, we can calculate your performance above as follows:

[tex](0.5*11) + (0.5*9) = +$1[/tex]

With a positive result, it is possible to determine that people will be more apt to accept the bet, as there is a positive probability of winning.

More information:

https://brainly.com/question/14009802?referrer=searchResults

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