Fair price of a repeated two-tetrahedron game
Question
Each turn you roll two four-sided dice, one red and one blue, each numbered 1 to 4. If blue beats red you receive the difference; if red beats blue you receive nothing. If they tie, the game ends at once; otherwise you play another turn. What is the fair value of this game?
Short answer
. Per turn, and the expected payment is . The value satisfies , so .
Adapted from OpenQuant; question and answer rewritten by SelfMadeQuant.com.
See the hint and the full worked solution in the question bank (free account).
Open the worked solutionLessons behind this question
- Sample Spaces, Events, and the Probability Axioms
- Counting and Combinatorics
- Expectation, Mean, and Variance
Start with a free lesson: Expectation, Variance and Covariance is part of a free topic. Create a free account, no card needed, to read it in full with worked solutions.
Read it free