Cointoss game - how much would you pay to play it? - TennisForum.com
 View Poll Results: How much are you willing to pay to play the game? Just \$1 (meaning that you couldn't lose any money) 3 27.27% \$2 3 27.27% \$3 1 9.09% \$5 0 0% \$10 0 0% \$25 0 0% \$100 0 0% \$1000 0 0% \$100,000 2 18.18% Other (please specify) 2 18.18% Voters: 11. You may not vote on this poll

Old Dec 16th, 2006, 10:16 PM Thread Starter
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Cointoss game - how much would you pay to play it?

The game is very simple:

I flip a coin.

If it's heads, you win \$1 and the game ends.
If it's tails, I flip it again.

If it's heads, you win \$2 and the game ends.
If it's tails, I flip it again.

If it's heads, you win \$4 and the game ends.
If it's tails, I flip it again.

And so on.

Question: What is the maximum amount of money you would be willing to pay to play this game?
GoDominique is offline

Old Dec 16th, 2006, 10:56 PM
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Re: Cointoss game - how much would you pay to play it?

50 cents?
controlfreak is offline
Old Dec 16th, 2006, 10:58 PM
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Re: Cointoss game - how much would you pay to play it?

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Old Dec 17th, 2006, 12:00 AM Thread Starter
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Re: Cointoss game - how much would you pay to play it?

Quote:
Originally Posted by controlfreak View Post
I wish it were so.
GoDominique is offline
Old Dec 17th, 2006, 12:09 AM
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Re: Cointoss game - how much would you pay to play it?

surely, no matter how much money you pay, you will ALWAYS win it back, the minimum amount of winnings you will get (and that is gaurenteed) is what you started with, so in theory, play with every thing you own.

Is that correct or am I missing something?
TomTennis is offline
Old Dec 17th, 2006, 12:10 AM
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Re: Cointoss game - how much would you pay to play it?

Quote:
Originally Posted by TomTennis View Post
surely, no matter how much money you pay, you will ALWAYS win it back, the minimum amount of winnings you will get (and that is gaurenteed) is what you started with, so in theory, play with every thing you own.

Is that correct or am I missing something?
King of Prussia is offline
Old Dec 17th, 2006, 12:11 AM
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Re: Cointoss game - how much would you pay to play it?

LMAO, we did this in uni. It was an example. He started to go off about Utility Theory and I think he somehow may have used a Monte Carlo simulation. Or maybe a mathematical equation dealing with Utility and stuff.

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~Cherry*Blossom~ is offline
Old Dec 17th, 2006, 12:19 AM Thread Starter
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Re: Cointoss game - how much would you pay to play it?

I just realise that I omitted a crucial information: I have an infinite amount of money and can pay out every possible win.
GoDominique is offline
Old Dec 17th, 2006, 12:25 AM
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Re: Cointoss game - how much would you pay to play it?

ok, I just looked at my notes and it's called St Petersburg Paradox. I'll look for the solution afterwards (I think we did it)

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~Cherry*Blossom~ is offline
Old Dec 17th, 2006, 12:28 AM
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Re: Cointoss game - how much would you pay to play it?

lol ok, my notes say:

Quote:
The paradox states that Expected Utility is infinity, so we should bet everything we have

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Old Dec 17th, 2006, 12:29 AM
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Re: Cointoss game - how much would you pay to play it?

Quote:
Originally Posted by ~*Supernova*~ View Post
lol ok, my notes say:
So you would bet everything you have to have a 50% chance to win 1\$.
King of Prussia is offline
Old Dec 17th, 2006, 12:31 AM
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Re: Cointoss game - how much would you pay to play it?

I don't get what would be the point to bet more than 1\$???
King of Prussia is offline
Old Dec 17th, 2006, 12:32 AM Thread Starter
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Re: Cointoss game - how much would you pay to play it?

Quote:
Originally Posted by King of Prussia View Post
So you would bet everything you have to have a 50% chance to win 1\$.
But, there's also a 25% chance to win \$2, and a 12.5% chance to win \$4, and a 6.25% chance to win \$8, and ...
GoDominique is offline
Old Dec 17th, 2006, 12:33 AM
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Re: Cointoss game - how much would you pay to play it?

Quote:
Originally Posted by GoDominique View Post
But, there's also a 25% chance to win \$2, and a 12.5% chance to win \$4, and a 6.25% chance to win \$8, and ...
But you get the same odds by betting 1\$... Or am I missing something?
King of Prussia is offline
Old Dec 17th, 2006, 12:34 AM Thread Starter
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Re: Cointoss game - how much would you pay to play it?

Quote:
Originally Posted by King of Prussia View Post
I don't get what would be the point to bet more than 1\$???
You need to bet more than \$1 if the game organiser (= me) demands it.
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