[rchandra]

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But was Blanka in the tournament originally? So he now has his original $500 plus the $700 for $1200 total. And the only position that pays more than this is 1st. He needs to sell some of his action to recover his costs. Using your math his EV at this point is $1000 and he's invested $1200. If he wasn't originally involved then that changes everything for him. For you to buy a part of him makes sense assuming he is equal to the other 3. If, as you say, he might be a little weaker and not playing at his best, then I would say it's a bad investment at this point in time.

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It doesn't matter whether or not Blanka was in the event originally. If he was, he has lost $500 but that doesn't affect his EV of buying Dhalsim's seat. Just like if he had dropped $500 in the toilet earlier today -- you wouldn't say that that affects his EV in the tournament.

It could affect his mindset though, if he is the tilty type who hates to be "stuck" and might try to maximize his chance of being "unstuck" at the cost of EV.