Beruflich Dokumente
Kultur Dokumente
Gambling
Index
Part A – (Exercise 3)
1. Introduction
2. Simulation
3. Conclusion
Part B – (Exercise 4)
1. Introduction
2. Theoretical approach
i. a
ii. b
iii. c
Part C – (Exercise 5)
1. Introduction
2. Theoretical approach
i. a
ii. b
Part D – (Exercise 6)
1. Introduction
In this exercise, and also in the following exercises, the European roulette is analysed. Aim
of exercise 3 is to determine the value of k (which stands for the winning amount) and the
value of θ (which stands for the probability of winning) so that it becomes advantageous to
play. To determine these values a simulation (playing 10 games 10000 times) is used.
2. Simulation
After having simulated 10 games 10000 times, the following values have been determined.
3. Conclusion
As θ (the probability of winning) increases, the amount of won money increases too even if k
(the winning amount) is constant but at the probability of 0.6, the amount of won money is
still negative (lose). As k increases, the amount of won money increases too even if θ is
constant but the pairs of values of θ and k where it is advantageous to play are 0.6 and 1
respectively.
Part B - (Exercise 4)
1. Introduction
The question stated in exercise 3 applies to exercise 4 but in this part of the report no
simulation is used to determine θ and k. These values are calculated theoretically.
2. Theoretical approach
(a) Calculate the expected win after 1 game in terms of (θ, k).
As the game is played once, the Bernoulli random variable has to be considered.
(b) Using the fact that each game is independent, calculate the expected win after 10
games in term of (θ, k).
(c) For a given value of θ, determine the range of values for k such that
Part C- (Exercise 5)
1. Introduction
This exercise follows from the previous. The only difference being the generalisation.
Meaning that the game costs £c to play, the prize for winning is £k and the probability of
winning is θ.
1. Theoretical approach
θ*(c + c) – c > 0
θ*(2*c) – c > 0
θ*(2*c) > c
θ > c / (2*c)
Part D - (Exercise 6)