Re: Risk of Ruin over 7 events
OK, I'll leave the assumptions to you, but here's how you work it out. Your probability of cashing in any one event is C. For an average player, C = 0.1 .
Probability of (cashing 0/7) = (1-C)^7 = 47.8% for average player
P(cashing 1/7) = 7 x C x (1-C)^6 = 37.2% for average player
P(cashing 2/7) = 21 x C^2 x (1-C)^5 = 12.5% for average player
P(cashing 3/7 or more) = 1 - (sum of the above) = 2.5% for average player
If you want to know where these numbers come from, google "Binomial Theorem".
Even if you plug in C = 0.15 then P(cashing 3/7 or more) is only 7%, and personally I think anyone who is cashing much more than that is probably losing equity by not "going for the win".
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