Skip to content

Multiplier making a stop-anytime die game fair

Question

You start with $1. Each time you roll a die and it is not a 11, your stake is multiplied by α\alpha; if it is a 11, you lose everything. You may quit whenever you like and keep your current stake. For what α\alpha is your expected payout the same no matter how many rolls you decide to make?

Short answer

α=6/5\alpha=6/5. After committing to nn rolls the expected payout is (56α)n\left(\tfrac56\alpha\right)^n. This is constant (equal to the starting $1) for all nn exactly when 56α=1\tfrac56\alpha=1.

Adapted from QuantQuestions.io; question and answer rewritten by SelfMadeQuant.com.

See the hint and the full worked solution in the question bank (free account).

Open the worked solution

Lessons behind this question

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