Consider the following dice game: A pair of diceis rolled.
Chapter 7, Problem 7.54(choose chapter or problem)
Consider the following dice game: A pair of diceis rolled. If the sum is 7, then the game ends andyou win 0. If the sum is not 7, then you have theoption of either stopping the game and receivingan amount equal to that sum or starting overagain. For each value of i, i = 2, . . . , 12, find yourexpected return if you employ the strategy of stoppingthe first time that a value at least as largeas i appears. What value of i leads to the largestexpected return?Hint: Let Xi denote the return when you use thecritical value i. To compute E[Xi], condition on theinitial sum.
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