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?

(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