Re: Lottery with free tickets to another lottery. Calculate EV?
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1. Lottery B has an EV of 0. A has an EV of 400/550 + 1/5*(0) - 1 = -0.27
2. B: EV = 1. A = 1 + 1/5*(1) - 1 = 1/5.
Thus B > A in both cases.
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Why are you adding 1/5*(0) when calculating A's equity in the first scenario. You get a free lottery B ticket. Your calculation would be correct if you had to buy the lottery B ticket.
Correct answer should be 400/550 + 1/5*(1) -1 = -0.07
Your calculation for scenario 2 is wrong as well, although the answer that B is better is correct for both.
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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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