Probability, Decisions and Games:

A Gentle Introduction Using R

Abel Rodrı́guez
Bruno Mendes
Solutions to Odd-Numbered Problems

Chapter 1

An introduction to probability

1. 200.
1
3. 3 × 1, 000, 000 = 333, 333.3(3).

5. Whether it will rain tomorrow (0.5). Whether Dow Jones will go up tomorrow (0.5). In both
situations, we can’t repeat tomorrow as many times as we want.

7. P (obtaining a 5 or a 6 when rolling a die) = P (obtaining a 5) + P (obtaining a 6).

9. P (obtaining at least 2 when rolling a die) = 1 − P (obtaining 1 when rolling a die)

11. Multiplication rule of probability.

13. First argument. There is nothing wrong with the first part. There is a mistake in the second
part, the calculation proposed assumes that at least one ace is the same event as an ace.
Second argument: The first part is correct. The formula is wrong in the second part: one
should use the probability rule for complementary events.

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Chapter 2

Expectations and fair values

1. If the utility function of the player is strictly monetary, gambling is irrational because it has
a negative expected profit. But if a player’s utility includes aspects other than monetary
(pleasure in gambling for example), and those aspects are more valuable than the monetary
loss, they can be considered a rational player.

3. Center of the variations and average size of the random fluctuations, respectively.

5. High variability means higher risk of big losses.

7. The statement is wrong, especially for players who are risk averse, since high variability makes
big losses more likely.

9. L1: $20, 000. L2: $20, 000. L3: $20, 000. L4: $20003.33. According to the rules we have
discussed, a rational player that can play the game repeatedly would rank L4 first for its
higher expected value. Among the other three bets (which have the same expected value),
the player would rank L2 second (since it has the lowest variance among the three), then L1,
and L3 last (since it has the largest variable).

11. You should choose Wager 4. If you choose Wager 1, you are assuming that 0 ≤ PR ≤ 0.4 and
0.3 ≤ PB ≤ 0.7. The first condition will imply the the expected profit will lie between 0 and
8, and in the second condition the expected profit would lie between 9.5 and 13. Both cannot
be true at the same time

13. Treatment A: 7.2months. Treatment B: 8.9months. From the point of view of a doctor (who
sees a lot of patients) it would make sense to maximize the expected life expectancy, and
therefore to recommend treatment B. On the other hand, the patient only gets to try the
treatment once, so he might well be interested in not loosing any extra time that he/she
might have. In that case you might want to minimize the maximum loss, which would lead
you to pick Treatment A.

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Chapter 3

Roulette

1. In gambling parlance, even bets give you a profit that is equal to your bet. They are not even
in the sense of having an expect profit of zero.

3. −$0.2626.

5. −0.0270 for all three bets.

7. −$0.0769.
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9. Probabilities: 38 and 12
38 . Expected profit: −$0.5263 and −$0.1052. The variance, respec-
tively, is $478.6704 and $7.7783. The rational player will choose the bet with the highest
expected value: the second bet.

11. 0.0029239.

13. $1.32.

15. n ≥ 247, 569.

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Chapter 4

Lotto and combinatorial numbers

1. 362, 880.

3. 142, 506.

5. 0.000000000000607 and 0.000000191, respectively. We are 313,869.5 times more likely to win
the Colorado lottery than a game of Keno.

7. 0.000004356.

9. Probability, 0.00000000000966738; expected profit, −$0.9778061.

11. 0.000000002. It is harder to win.

13. 0.000000121 and 0.000169, respectively.

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Chapter 5

The Monty Hall paradox and

conditional probabilities

1. No. This is not like Monty Hall, because there is no possibility of the prisoner changing his
status or swapping positions with the other prisoners.

5. P (X = 2 and Y = 5) = 0.25 and P (X = 2)P (Y = 5) = 0.5 × 0.5 = 0.25. The same result is
obtained for X = 2 and Y = 1.

7. (a)0.001995; (b) 0.5, (c) 0.9999, (d) 0.00001, (e) 0.5, (f) a lower rate of false negatives because
one does not want people thinking they don’t have the HIV virus when in fact they do.

9. $0.8.

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Chapter 6

Craps

4
1. 36 .

3. 0.3038 and 0.09203.

12
5. 36 .

7. Following the same approach as with the pass line bet:

Pr(winning the no pass line bet) = Pr(winning in the 1st phase) + Pr(winning in the second phase)

For the first term,

3
Pr(winning in the 1st phase) =
36

For the second,

Pr(winning in the second phase) =

Pr(point is 4) · P (shooter gets a 7) + Pr(point is 4) · P (shooter gets a 7)+
Pr(point is 6) · P (shooter gets a 7) + Pr(point is 8) · P (shooter gets a 7)+
Pr(point is 9) · P (shooter gets a 7) + P (point is 10) · P (shooter gets a 7),
949
and therefore Pr(winning the no pass line bet) = 1980 .

9. If in the don’t pass line bet payouts were such that 12 in the come-out roll leads to the player
winning, the expected value of the game would be positive (≈ 0.0141414), which means that
the house would always lose money. No casino would offer such a bet.
2
11. 9 and 19 .

13. −$0.9(4); it’s the same for both bets.

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Chapter 7

Roulette revisited

1. The bettor doubles his/her bets after each loss. Player might not have enough money to
survive a long string of losses.

3. Minimum bets make you go bust earlier. Maximum bets keep you from continuing to bet in
order to recoup the losses in a loosing streak.

5. log2 30 = 4.9 or 4 turns.

7. It goes exactly as before, you make your bet on the pass line or don’t pass line, and whenever
you loose you just bet double your losses in the next round.

9. Almost zero (8.35677 × 10−56 ).

11. p = 0.064905, this probability is not that small, so the feat is not impressive enough for the
shooter to be called a dominator.

13. Near zero, so if you observe this event, it is very likely the wheel is biased.

15. 0.09468.

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Chapter 8

Blackjack

1. It’s likely that the dealer will go bust.

3. Have several decks of cards in the shoe so that fluctuations in number of high or low cards
are much smaller.

5. 99%.

7. 40%.

9. 0.1111(1).

11. Basic strategy is unaffected. Card counting is rendered completely useless.

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Chapter 9

Poker

1. 0.0002401 and 0.0006.

3. Yes it is.

5. 0.8372 and 0.8139.

7. 0.02272 and 0.25.

9. 0.2045 and 0.

11. 0.0(45) and 0.1136.

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Chapter 10

Strategic Zero-Sum Games with

Perfect Information

1. It means that whatever one party wins it is always at the expense of the other. If politics are
zero-sum, then it is impossible for both parties to represent progress.

3. Jose strategy 3, is a dominated strategy. Liza’s strategy 2 will be dominated too. No strategy
is dominant. Liza will always choose strategy 1 and Jose will always choose strategy 1. (-2,2).

5. A and C dominate.

7. Yes, it is a zero-sum game because, for each strategy, the gains add up to a constant. There
will be no pure strategy solution to the game.

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Chapter 11

Rock-Paper-Scissors: Mixed Strategies

in Zero-Sum Games

1
1. There is no pure strategy to this game. There is a mixed-strategy solution with ph = pt = 2
and the respective payoff is zero.

3. qa1 = 17 , qa2 = 27 , qd1 = 4

7 and payoff is (0, 0).

5. Each strategy should be chosen with probability 17 .

7 4 9
9. pp = 20 , ps = 20 , pr = 20 .

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Chapter 12

The Prisoner’s Dilemma and Other

Strategic Non-zero-sum Games

1. No player has a strategy that is always better or always worse than all the others. Yes, there
is a mixed strategy equilibrium with probabilities, p1 = 0.4, p2 = 0.2, p3 = 0.4 and pa = 0.5,
pb = 0 and pc = 0.5.

3. Neither player has a strategy that is always the best choice. Obama’s and Romney’s Right
strategy is dominated. Both candidates have a pure-strategy Nash equilibria when they both
choose the Center strategy.

5. There’s a mixed-strategy solution when players choose strategy 1 55.(5)% of the time, strategy
2 11.(1)% of the time and strategy 3 33.(3)% of the time. In this game, the kids are more
willing to share the chips.

7. Denote the strategies by (x, y), where x represents the sum of the number of coins in the
players hands, and y denotes the number the player declares. The strategies (0, 1), (2, 0) are
obviously dominated. There’s a mixed strategy: choose non-dominated strategies with equal
probability. In order to make it zero-sum, make all draws have (0,0) payoff.

9. So that the suspects cannot coordinate their efforts.

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Chapter 13

Tic-Tac-Toe and Other Sequential

Games of Perfect Information

1. See page 197 of the book.

3. They should always pass if there are even rounds resulting in a payoff (12,12).

5. Klara will play B1 first, then Nara will play A2 and ends the game there with a gain of 3 for
Klara and a gain of 2 for Nara.

7. The player who starts is indifferent between taking one or two sticks at the beginning and
regardless of his/her choices, player B always wins. Player B just needs to make sure it
doesn’t leave one or two sticks on the table; this leads to the payoff (-1,1).

9. Yes, there is a solution, the buyer will reject all options and will want to sell for $500.

11. If a player starts by saying zero, it is informing the opponent they have no coin in their hand;
similar situation when the first player says two: he/she is saying he/she has one coin. When
the first player says sum will be one, it is harder to make a decision, since it will depend on
how many coins you decided to hold in your hand.

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