4.2 Exercise 36

A “friend” offers you the following deal: For a $10 fee, you may pick an envelope from a box containing 100 seemingly identical envelopes. However, each envelope contains a coupon for a free gift.

• Ten of the coupons are for a free gift worth $6.
• Eighty of the coupons are for a free gift worth $8.
• Six of the coupons are for a free gift worth $12.
• Four of the coupons are for a free gift worth $40.

Based upon the financial gain or loss over the long run, should you play the game?

1. Yes, I expect to come out ahead in money.
2. No, I expect to come out behind in money.
3. It doesn’t matter. I expect to break even.