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Pick a card, any card.. (Posted on 2008-03-11) Difficulty: 3 of 5
You sit down with a well mixed deck containing A cards marked "+" and B cards marked "". You may draw cards from this deck as long as you want, i.e., you can stop playing at any point. Each time you draw a + card you are given $1 and each time you draw a card you have to pay $1. Cards are not replaced after having been drawn.

What would be a fair amount to pay for the right to play (i.e., what is the expected payoff) and under what circumstance should a player cease drawing?

No Solution Yet Submitted by FrankM    
Rating: 2.7500 (4 votes)

Comments: ( Back to comment list | You must be logged in to post comments.)
re(2): What's the catch? - it's not that simple | Comment 7 of 37 |
(In reply to re: What's the catch? - it's not that simple by Leming)

So you're saying when there are 2 pluses and 3 minuses, one should still choose to play, and expect a 0.20 return from there, making this particular value of A and B worth .20 to play, whereas I had assumed that if the minuses exceed the plusses, one does not play.


  Posted by Charlie on 2008-03-11 15:52:31
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