Question

In: Statistics and Probability

Suppose in the gambler’s ruin problem that the probability of winning a bet depends on the...

Suppose in the gambler’s ruin problem that the probability of winning a bet depends on the gambler’s present fortune. Specifically, suppose that αi is the probability that the gambler wins a bet when his or her fortune is i. Given that the gambler’s initial fortune is i, let P(i) denote the probability that the gambler’s fortune reaches N before 0.

(a) Derive a formula that relates P(i) to P(i − 1) and P(i + 1).

(b) Using the same approach as in the gambler’s ruin problem, solve the equation of part (a) for P(i).

(c) Suppose that i balls are initially in urn 1 and N − i are in urn 2, and suppose that at each stage one of the N balls is randomly chosen, taken from whichever urn it is in, and placed in the other urn. Find the probability that the first urn becomes empty before the second.

Solutions

Expert Solution


Related Solutions

In the casino game roulette, the probability of winning with a bet on red is p...
In the casino game roulette, the probability of winning with a bet on red is p = 17/38. Let Y equal the number of winning bets out of 1000 independent bets that are placed. Find P(Y > 500), approximately. Show all your work.
Question3(A) Exercise 2.4.29 (The gambler’s ruin problem) Two gamblers, A and B, bet on the outcomes...
Question3(A) Exercise 2.4.29 (The gambler’s ruin problem) Two gamblers, A and B, bet on the outcomes of successive flips of a coin. On each flip, if the coin comes up heads, A collects from B $1.00, whereas if it comes up tails, A pays to B $1. They continue to do this until one of them runs out of money. If it is assumed that the successive flips of the coin are independent and each flip results in a head...
the chance of winning a bet is 50%. If you win a bet, you receive the...
the chance of winning a bet is 50%. If you win a bet, you receive the same amount that you put in. you plan on betting in a "double-down" loss scheme of $5/$10/$20/$40/$80/$160 for each consequtive loss. This equates to a total of $315. If you were to win a bet, the following bet will be $5. for example, if you lose 3 times on a row and win one the fourth, you would bet $5/$10/$20 /$40 and then the...
The probability of winning the Powerball jackpot on a single given play is 1/175,223,510. Suppose the...
The probability of winning the Powerball jackpot on a single given play is 1/175,223,510. Suppose the powerball jackpot becomes large, and many people play during one particular week. In fact, 180 million tickets are sold that week. Assuming all the tickets are independent of one another, then the number of tickets should be binomially distributed. The values of the parameters n and p in this binomial distribution are: n= p= Then, use the binomial distribution to find the probability that...
The probability of winning a stake is $5. The chance of winning each stake is 50%....
The probability of winning a stake is $5. The chance of winning each stake is 50%. You plan to bet in increments of $5, $10, $20, $40, $80, $160 ($315 in total) for each consecutive loss. For each win, you start back at $5 and continue betting following the incremental bet scheme. This means you would need to win 64 times without losing 7 in a row. What is the probability of this happening?
If you bet $1 in Kentucky’s Pick 4 lottery, you either lose $1 or gain $4999. (The winning prize is $5000, but your $1 bet is not r
If you bet $1 in Kentucky’s Pick 4 lottery, you either lose $1 or gain $4999. (The winning prize is $5000, but your $1 bet is not returned, so the net gain is $4999.) The game is played by selecting a four-digit number between 0000 and 9999. What is the probability of winning? If you bet $1 on 1234, what is the expected value of your gain or loss?  
On each bet, a gambler loses $2 with probability 0.2, loses $1 with probability 0.7, or...
On each bet, a gambler loses $2 with probability 0.2, loses $1 with probability 0.7, or wins $10 with probability 0.1. After 100 of these bets, what is the approximate probability that the gambler's total is negative? Show your work below.
Gambler's ruin chain: Suppose a person decides to participate in the following game: a fair coin...
Gambler's ruin chain: Suppose a person decides to participate in the following game: a fair coin is tossed and the person bets on the face that would fall, if you hit then you win the same amount as you bet and your bet is returned, otherwise you lose your bet. The player follows a strategy where they bet all their money in case of having $ 5 or less and Bet $ 1 otherwise, stopping playing when your capital is...
The probability of winning a raffle with a single ticket is 1 in 400,000,000. In May...
The probability of winning a raffle with a single ticket is 1 in 400,000,000. In May and June, 200,000,000 tickets were bought for the raffle. 1. Assume the tickets win or lose independently of each other and give the exact probability that there was no winner during the two months. 2. Only using a basic scientific calculator, give an approximation to the same question from part 1. Explain why this approximation is a good one. Explain your work please.
The probability of winning on a lot machine is 5%. If a person plays the machine...
The probability of winning on a lot machine is 5%. If a person plays the machine 500 times, find the probability of winning 30 times. Use the normal approximation to the binomial distribution. A travel survey of 1500 Americans reported an average of 7.5 nights stayed when they went on vacation. Find a point estimate of the population mean. If we can assume the population standard deviation is 0.8 night, find the 95% confidence interval for the true mean. SHOW...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT