You have just been chosen to appear on HoosierMillionaire! The rules are as follows: There are four hiddencards. One says “STOP” and the other three have dollaramounts of $150,000, $200,000, and $1,000,000. You get tochoose a card. If the card says “STOP,” you win no money.At any time you may quit and keep the largest amount ofmoney that has appeared on any card you have chosen, orcontinue. If you continue and choose the stop card, however,you win no money. As an example, you may first choose the$150,000 card, then the $200,000 card, and then you maychoose to quit and receive $200,000!a If you goal is to maximize your expected payoff,what strategy should you follow?b My utility function for an increase in cash satisfiesu(0) 0, u($40,000) .25, u($120,000) .50, u($400,000) .75, and u($1,000,000) 1. After draw-ing a curve through these points, determine a strategy that maximizes my expected utility. You might want touse your own utility function.
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
You have just been chosen to appear on Hoosier
Millionaire! The rules are as follows: There are four hidden
cards. One says “STOP” and the other three have dollar
amounts of $150,000, $200,000, and $1,000,000. You get to
choose a card. If the card says “STOP,” you win no money.
At any time you may quit and keep the largest amount of
money that has appeared on any card you have chosen, or
continue. If you continue and choose the stop card, however,
you win no money. As an example, you may first choose the
$150,000 card, then the $200,000 card, and then you may
choose to quit and receive $200,000!
a If you goal is to maximize your expected payoff,
what strategy should you follow?
b My utility function for an increase in cash satisfies
u(0) 0, u($40,000) .25, u($120,000) .50,
u($400,000) .75, and u($1,000,000) 1. After draw-
ing a curve through these points, determine a strategy
that maximizes my expected utility. You might want to
use your own utility function.
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