On last
night's "Gambling with an Edge," I posed a question that Munchkin and
I plan to address on the air next Thursday. This might well be a subject that's
appropriate for discussion here. I don't intend to participate in this
discussion other than setting it up --- although I will tell you where I stand
on the issue --- but rather "save" my analysis for "on the air"
next week.
In
September, the Palms Friday-Saturday drawings give the winners a choice. The
winners can select a guaranteed $1,500, or they can play a game. In this game,
there four envelopes with a 0, 1, 2, 3 inside in some order. Players arrange
the envelopes (not knowing what's inside), and then read off the number in
dollars. The greatest amount you can win is $3,210 and the smallest is $123.
The average
(mean) of the equally-likely choices is $1,666.50. The average (median) of the
choices is anything between $1,320 and $2,013, including, of course, the
fallback prize of $1,500.
What we
call EV (or ER) in video poker is $1,666.50 --- if we're willing to
"gamble." You could give up about 10% of that, chicken out, and keep the $1,500
with no gamble.
To me this
is a no-brainer. I'd go for the higher-EV option 100% of the time. I'd do it if
the choice were $1,666.50 versus a guaranteed $1,650. This is not a close
decision for me. I'm sure many players with chicken out and keep the $1,500.
What would
you do? And why?
I don't
think there are any "cash versus free play" differences between the
two choices. Even if there are in the casino, let's ignore them for the sake of
this discussion.
Bob
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