You are a contestant on a game show called "Bargain or No Bargain." You are presented with three briefcases, which contain rewards of $500,000, $2,000, and $500. The host of the show says you can either open one random case and keep the amount inside, or you can accept a guaranteed award of $160,000. What is the mathematically correct decision, and why?

A. Take the $160,000, because it is greater than the expected value of the briefcases.

B. Choose a briefcase, because the expected value is greater than $160,000.

C. Choose a briefcase, because the expected value is less than $160,000.

D. Take the $160,000, because it is less than the expected value of the briefcases.

Question

Mathematics

Oneill

16 November, 15:54

You are a contestant on a game show called "Bargain or No Bargain." You are presented with three briefcases, which contain rewards of $500,000, $2,000, and $500. The host of the show says you can either open one random case and keep the amount inside, or you can accept a guaranteed award of $160,000. What is the mathematically correct decision, and why?

A. Take the $160,000, because it is greater than the expected value of the briefcases.

B. Choose a briefcase, because the expected value is greater than $160,000.

C. Choose a briefcase, because the expected value is less than $160,000.

D. Take the $160,000, because it is less than the expected value of the briefcases.

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Answers (1)

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Carmelo Goodwin · Answer 1

In my opinion there is no "mathematically correct decision" but I would take the guaranteed award because it’s more than 2/3 of the brief cases. There’s also a small chance that you would get the 500,000. So A