Question
This is another twitch to my original question. I was thinking about it and trying to find some logic to the result. Can you help
This is another twitch to my original question. I was thinking about it and trying to find some logic to the result. Can you help me with this one?
I am trying to understand the St. Petersburg paradox with different examples. I am having a test next week I am trying to "digest" the material
Let say this time I flip my fair coin four times (It could be any number), but I am looking for three heads in a row (or the same result three times), but this time I am including a reward for it, let say I pay you $100 every time you get those three heads or to make it simple every time the same side happens 3 times in a row. How I know how much money I can pay to play before It does not make sense for me to play because I don't get any money or is too risky. I was thinking in situations like in casinos, lotteries, or contests to get something.In other words, my question is, I charge you each time $ 1 to play a game with a coin and the only way to win $100 is by getting three same sides in a row. Based on the probabilities of getting those three same sides and investing 1 dollar each time What is the amount of money a player should pay in order to maintain a rational investment to try to win or in other words What is the most money a reasonable player will pay to play the game? Is a dollar too much based on the probability of getting three in a row or could be more or less?
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