Die game that continues on high rolls
Question
In a casino game you roll a fair six-sided die and bank the number shown. If the roll is , or you roll again and keep adding; the first time you roll , or , that value is added too and the game ends, paying your total. What is the fair price of the game?
Short answer
. Let be the value. Half the time you roll a low number (average ) and stop; half the time you bank a high number (average ) and face the same game again. So , giving .
Adapted from QuantQuestions.io; question and answer rewritten by SelfMadeQuant.com.
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Open the worked solutionLessons behind this question
- Conditional Expectation and Variance Revisited
- Counting and Combinatorics
- Expectation, Mean, and Variance
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