Q1
Question:
Suppose we play a game. I roll a die up to three times. Each time I roll, you can either take the number showing as dollars, of roll again. What is your expected winnings?
Solution:
Let random variable X k X_k Xk be the winnings for rolling a die up to k times.
The key is to formulate the following strategy: after rolling a dice, if the number showing is greater than the expected winnings of rollings the rest of the times, you should take the money. Expressing this with math:
E [ X k ] = E [ max E[X_k] = E [ \max E[Xk]=E[max (number for this toss, E [ X k − 1