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Question Directory
Box Game
There are four sealed boxes. One box contains £100, and the rest are empty. A play can pay some price £$x$ to open a box. What value of $x$ makes this game fair?
The payoff a player will win by opening the winning box on their $k$th try is
$$
\text{Payoff}(k) = 100 - kx.
$$
The player will open the winning box on their $k$th try with probability of $\frac{1}{4}$. The expected payoff is therefore
$$
\text{E}[\text{Payoff}] = \frac{1}{4} \sum_{k=1}^{4} (100 - kx).
$$
If the game is fair, the expected payoff should equal zero.
$$
\frac{1}{4} \sum_{k=1}^{4} (100 - kx) = 0
$$
$$
400 = x \sum_{k=1}^{4} k
$$
$$
400 = 10x
$$
$$
x = 40
$$
This result makes sense, as the player will on average open the winning box after opening 2.5 boxes, and $\frac{100}{2.5} = 40$.