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Gambling Gus has $200 and plays a game where he must continue playing until he has
Chapter 6, Problem 6(choose chapter or problem)
Gambling Gus has $200 and plays a game where he must continue playing until he has either lost all his money or doubled it. In each game, he has a 2/5 chance of winning $100 and a 3/5 chance of losing $100. What is the probability that he eventually loses all his money? (Warning: The stochastic matrix here is far from regular, so there is no steady state. A calculator or computer is required.)
Questions & Answers
QUESTION:
Gambling Gus has $200 and plays a game where he must continue playing until he has either lost all his money or doubled it. In each game, he has a 2/5 chance of winning $100 and a 3/5 chance of losing $100. What is the probability that he eventually loses all his money? (Warning: The stochastic matrix here is far from regular, so there is no steady state. A calculator or computer is required.)
ANSWER:Step 1 of 4
Find the probability that Individual G will eventually will loses all his money.
It is known that Individual G has $200 in hand and probability of chance of winning $100 is 2/5.
There are so many possible cases where the Individual G will eventually will loses all his money.
Case 1: Lost in the first two tries
Find the probability when the individual lost in the first two trials.
