In: Statistics and Probability
Fair game: The game with expected earning/loss equal to zero.
A dice game costs $10 to play. You get to roll two dice and if you roll a 2 or a 12 you win $100, if you roll a 7 you win $20 and there is no prize otherwise. Is this a fair game?
In a fair game, expected earning is zero. The dice game costs
$10 to play. Also, rolling a 2 or a 12 will give the player $100,
and rolling a 7 would give $20. No prize for any other outcome. The
probability space for this game will be
. Each outcome is equally likely having probability
.
Now, below table organizes the probability of outcomes of sums of the dice.
Sum | Probability |
2 | ![]() |
3 | ![]() |
4 | ![]() |
5 | ![]() |
6 | ![]() |
7 | ![]() |
8 | ![]() |
9 | ![]() |
10 | ![]() |
11 | ![]() |
12 | ![]() |
It is to be noted that, the total earning have to be zero for
this to be a fair game. The total expectation would include the
debit of $10 to play the game. Hence, we have the following total
expected earning as
, where Xi is the earning from getting the sum equal to the i.
Hence, we have
or
or
or
or
or
or
or
. Hence, not only the expected earning is not zero, it is negative,
indicating that playing would lead to a loss in earning of the
player. Hence, the game is not fair.