Two teams play against each other in a tournament. The rules of the tournament do not allow any drawn games and the first team to win four games wins the tournament. Therefore, a minimum of four, and a maximum of seven games must be played in the tournament to determine the winner.

Riley supports one of the teams, and wants to end up having lost $1000 if his team loses the tournament, and having won $1000 if his team wins the tournament. Riley wants to wager an amount on each game, and in terms of betting rules he will win that amount of money if the team he bets on wins, and lose it if the team loses. The amount wagered by Riley may not necessarily be the same for any two games.

How much money should Riley bet on the first game?

Note: For the purposes of the problem, assume that Riley will bet on every game until the tournament ends, so that he cannot bet $0 on any game.

I'm thinking that he should bet $250 dollars on the first game. 

The amount he should bet on each successive game should be dependent upon the results of the previous game but I'm not 100% sure what that strategy should be.

Posted by Sing4TheDay on 2008-12-24 13:47:28