The drawing
You meet a man who has a jar with 100 slips of paper in it.
One of the slips of paper has "25" written on it.
Four of them have "10" written on them.
Four of them have "5" written on them.
Five of them have "2" written on them.
The rest are blank.
He offers you a chance to play a game. If you pay him 1 dollar, you will be blindfolded and then you can pick one of the slips of paper out of the jar. The blindfold will be removed and if the slip has a number on it, he will pay you that amount in dollars. If you draw a blank slip, you don't get any money.
Given that 100 cents = 1 dollar, what is your mathematical expectation in cents if you play this game one time?
The answer is -5.
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1 solution
Moderator note:
Good clear explanation of the expected value.
The numbers in the jar add up to 95 (25 + (4 * 10) + (4 * 5) + (5 * 2))
So if you play it 100 times, and each outcome happens once, you will win a total of 95 dollars while paying in 100. That is a net of -5 dollars for 100 plays. So you expectation for a single play is -5/100 dollars = -5 cents.