>u can go in the draw for 10 billion dollars, and the odds of winning are 1 in 100
>u can go in the draw for 5,000 and the odds of winning are 1 in 3
What u do anon?
Sure you're not studying autism you dumb twat. It's very simple, 1% chance at 10 billion or a 33.33% chance at 5,000. Stop being a spastic.
You're an idiot.
He's right, in theory.
Expected value = the value that each individual ticket would reach if a near infinite number of tickets were bought and all of those values were averaged
It's a good way to measure the raw value of one probability over another
It's a little too simplistic for this because it doesn't factor in urgency (some people might find $10b to be excessive, and really really need that $5g) and other stuff but in terms of raw probability the top one is by far a better deal.
Which is why you go by the values OP set. 100 people including you buy a ticket for a 33.33% chance to win $5000. You don't add your own values into the equation. Some top tier hectism here.
Expected value is the correct way to decide this, but not expected value of money, instead the expected value of the utility of that money. Money has diminishing marginal returns, and traditionally this is modeled as utility = ln(total wealth). This means the correct decision depends on how rich you are already. If you are heavily in debt (owing more than $4998) then you should go for the big gamble, otherwise go for the $5000.