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See Hint Assuming Ami has a typical reaction, do you think she is more likely to play BijongBall in the first case (when the pitch is "you can win 35% of the time") or the second case (when the game is advertised as "you have only a 65

Economics Dec 03, 2020

See Hint Assuming Ami has a typical reaction, do you think she is more likely to play BijongBall in the first case (when the pitch is "you can win 35% of the time") or the second case (when the game is advertised as "you have only a 65.00% chance of getting zero")? Ami is being affected by an) framing effect barker fallacy anchoring effect gambling bias 10 OF 13 QUESTIONS COMPLETED SUBMIT ANSWER

Expert Solution

Size of bet per grid number = Jackpot / Numbers in the grid
= $ 10,000 / (10 X 10) = $100 per option

Part 1

When 35 numbers selected

Bet expenses = 35 X size = $3500

Expected win = 35% X $10,000 = $3500

Expected payoff = Bet expenses - expected winn = $3500 - $3500 = 0

Part 2

65 numbers not selected = 35 numbers selected

Bet expenses = 35 X size = $3500

Expected win = 35% X $10,000 = $3500

Expected payoff = Bet expenses - expected winn = $3500 - $3500 = 0

Part 3

Ami is more likely to play in the first case as 35% winning chances seems to be very high in the first instance. On the other hand 65% losing chances as in the second game looks very high and therefore a show stopper for the casino guests.

Part 4

First alternative is the correct one as the framing effect is a phsycological bias where people decide on options based on whether the options are presented positively or negatively.

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