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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?

See The Solution Submitted by FrankM    
Rating: 2.7500 (4 votes)

Comments: ( Back to comment list | You must be logged in to post comments.)
re: Incorrect assumption | Comment 23 of 37 |
(In reply to Incorrect assumption by FrankM)

Paradoxically, stopping play after a "small" excess of B has been reached is also an incorrect assumption.
  Posted by Charlie on 2008-03-12 15:49:09

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