Consider the Following Scenario to Answer the Questions That Follow

question 77

Multiple Choice

Consider the following scenario to answer the questions that follow.
Suppose that in an experimental setting, 100 students are asked to choose between Gamble A and Gamble B, where:
Gamble A: The student will receive $50 with a 70% probability and $100 with a 30% probability.
Gamble B: The student will receive $50 with a 50% probability, $200 with a 25% probability, and $0 (nothing) with a 25% probability.
-Which of the following formulas shows the correct formula for the expected value (EV) of Gamble B?

• A) EV = 0.5 × ($50) + 0.25 × ($25)
• B) EV = 0.5 × ($50) + 0.25 × ($100) + 0.25 × ($250)
• C) EV = 0.5 × ($50) + 0.5 × ($200)
• D) EV = 0.5 × ($50) + 0.25 × ($200)
• E) EV = 0.25 × ($50) + 0.25 × ($200)

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Definitions:

Fairness

The quality of treating people equally without favoritism or discrimination.

General Framework

A broad system or structure that provides guidance or support for activities, processes, or methodologies within a particular domain.

Ethical Issue

A problem or situation that requires a person or organization to choose between alternatives that must be evaluated as right (ethical) or wrong (unethical).

General Framework

A foundational structure, set of guidelines, or system that serves as a basis for developing something more specific or detailed.