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During a cash poker game, a professional gambler bets $6,000 on the cards in his hands. The bet has a 0.81 probability of producing a large profit of $6,500, a 0.08 probability of producing a small profit of $200, and a 0.11 probability of producing a loss of $6,000. If the gambler were to continue making bets with this probability distribution, what would his expected profit be?

Respuesta :

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The expected profit for the gambler is $4,621

How to get the expected profit?

The possible outcomes are:

  • Winning $6,500, with a probability of 0.81
  • Winning $200, with a probability of 0.08
  • Lossing $6,000, with a probability of 0.11

Then the expected profit is:

P = ($6,500*0.81 + $200*0.08 - $6,000*0.11) = $4,621

The expected profit for the gambler is $4,621

If you want to learn more about expected values:

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