The expected profit should be viewed as a long-term thing. Obviously, if you play the game just once, there is no way you can end up with a $0.50 profit exactly you will either lose $1 or win $8. In the above example, you can expect to earn a $0.50 profit on each dice roll. Pay close attention you may not find it easy to grasp. Since the expected profit is positive, you should accept his proposition! Is this a good bet? Let’s see what your expected profit is on a single dice roll:Įxpected Profit = ($8 * 1/6) – ($1 * 5/6) = +$0.50 You clearly have one chance out of six to make the correct call, while having a 5/6 probability of losing. In other words, you must try to predict whether the dice will show 1, 2, 3, 4, 5 or 6.
Suppose a guy offers you to bet on the outcome of dice roll. Expected Profit = (Potential Net Gain * Probability of Winning) – (Potential Loss * Probability of Losing)
