Question

You are given the option to repeatedly make the following bets with Dr. Horton. Which bets should you accept?

a) Win $1. Lose $10. 95% chance of winning. (Correct)
b) Win $1. Lose $10. 20% chance of losing.
c) Win $10. Lose $1. 95% chance of losing.
d) Only a and c
e) a, b, and c

Answer 1

The best bets to accept are options a) and c) in the given scenario.

Step-by-step explanation:

The best bets to accept are a) Win $1, Lose $10 with a 95% chance of winning, and c) Win $10, Lose $1 with a 95% chance of losing.

In option a) you have a greater chance of winning and in option c) you have a greater chance of losing. Option b) has a low chance of winning and option d) includes the worst bet, which is option c). Therefore, the best bets to accept are only options a) and c).