Two traders, Warren and George, sit in a bar discussing probabilities. They decide to bet $1,000 on who will win the best of 5 coin tosses. For each flip of the coin Warren will win if it comes up heads and George will win if it comes up tails.
After 3 coin tosses Warren is ahead with 2 heads to George's 1 tail when the bar runs out of beer and they decide to abandon the game. What is the fairest way to divide up the pot?
(As a trader, you should be able to work out the probability of the each of these traders winning if they continued to play the game.)
CU
culsu
Rep: 50
Posts: 48
I'd suggest they slip the bartender $200 out of the pot to go in back and fetch more beer, then carry on with the two remaining tosses for $800.
George's chances of pulling ahead are 25%, not remarkably good but still possible. $750 to Warren and $250 for George sounds fair, but George has to leave the tip.
George's chances of pulling ahead are 25%, not remarkably good but still possible. $750 to Warren and $250 for George sounds fair, but George has to leave the tip.