Deal Or No Deal!?
Anyone ever see that 'deal or no deal show', hosted by howie mendel? My question is how to determine if it is mathematically correct to take the 'deal' offered by the 'banker.'
Lets say you are a contestant, and you are down to the final 4 breifcases, one of which is in your possesion and three which are out on the stage. The 4 cases have totals as follows: .01, 500, 75,000, and 400,000.
Therefore, your EV is .01*.25 + 500*.25 + 75,000*.25 + 400,000*.25 = 118,875 right?
And as long as the banker's offer is less than or equal to the calculated EV, you should always say "NO DEAL, HOWIE!" right?
In the above example, the deal offered by the banker was 70,000. I don't know if the values in the cases were correct, but I do know for sure that there was a 400,000 case still in play. Therefore, even if the remaining cases were .01, 1, 10, and 400,000, your offer should always be about 100,000 (25% of 400,000) to be accepted, right?
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