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Mark is a gambler and subject to the projection bias with alpha = 1/3. His favorite game to play is coin-flipping because it is easy
Mark is a gambler and subject to the projection bias with alpha = 1/3. His favorite game to play is coin-flipping because it is easy to understand. The game only has three states: heads, tails, and 'edge. Each state can happen with equal probability, and the realization is independent across games. Mark's goal is to guess what state will next be realized by the coin. If he guesses correctly, he will earn a payoff equal to twice the amount he wagered. If he guesses incorrectly he will simply lose whatever he has wagered. Mark is currently gambling on a CTA train. The last coin flip came up as a `tall. As he is subject to the projection bias, he decides to bet $90 on that state. How much does Mark expect to win or lose? Round your answer to the nearest cent and do not include the dollar sign ($)
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