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One paid reroll of a die costing a dollar

Question

Alice rolls a fair six-sided die and looks at the result. She may either keep it, receiving that many dollars, or pay $1 to roll a second time, in which case she receives the value of the second roll instead. She can reroll at most once. If she plays optimally, what is her expected net payout?

Short answer

236\tfrac{23}{6}. Rerolling is worth 3.5−1=2.53.5-1=2.5 on average, so she keeps any first roll of 33 or more and rerolls a 11 or 22. That gives 13⋅2.5+23⋅4.5=236≈3.83\tfrac13\cdot 2.5+\tfrac23\cdot 4.5=\tfrac{23}{6}\approx 3.83.

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

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