Re: Lottery with free tickets to another lottery. Calculate EV?
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so the answer to scenario 2 is:
B: Ev =1
A: 1+ 1/5(2) -1 = .4
Thus B > A
RIGHT?! [img]/images/graemlins/confused.gif[/img]
So the general formula for my scenanrios is:
prize A/odds A + 1/5(EV Lottery B +1) -1??
Why (Lottery B +1)? and why -1 at the end?
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Right. You subtract 1 because you have to pay 1 for a ticket and in the calculation for lottery A you add 1 to the EV of b, because you don't have to pay for this ticket (whereas in the previous calculation of EV(b) we included the entryfree ... and now we have to remove it).
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