Behavioural Economics

a) A bag contains two balls one red and one green. After a ball is withdrawn from the bag it is returned to the bag before the next draw. An individual will draw a ball out of the bag 10 times. If the first four draws result in a red ball being picked what would a rational gambler's estimate be of the fifth ball being drawn as red? Why is this the case?

b) In relation to a) above, if the gambler was an advocate of 'gambler's fallacy; what would the estimate be of the fifth ball being drawn as red? Explain your answer

answer b) only

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