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Compute expected payoff of reroll dice game

Last updated: Mar 29, 2026

Quick Overview

This question evaluates understanding of probability theory and expected-value computation in stopping-time processes, including conditioning and infinite-series reasoning, and also tests modeling of per-trial costs and break-even analysis.

  • medium
  • Citibank
  • Statistics & Math
  • Data Scientist

Compute expected payoff of reroll dice game

Company: Citibank

Role: Data Scientist

Category: Statistics & Math

Difficulty: medium

Interview Round: Take-home Project

You roll a fair six-sided die repeatedly. After each roll you immediately receive an amount equal to the face value. If you roll 4, 5, or 6 you must roll again; the game stops the first time you roll 1, 2, or 3. Derive the expected total payout. Show all steps (conditioning on the stopping time or using an infinite series). Then generalize to a biased die where P(roll in {4,5,6}) = p and the expected value of a single roll is μ; express the expected total payout in terms of p and μ. Finally, suppose each roll after the first incurs a fixed cost c; derive the break-even c that makes the game fair.

Quick Answer: This question evaluates understanding of probability theory and expected-value computation in stopping-time processes, including conditioning and infinite-series reasoning, and also tests modeling of per-trial costs and break-even analysis.

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Oct 13, 2025, 9:49 PM
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Take-home Project
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5
0

Repeated Die Rolls with Stopping Rule and Costs

You repeatedly roll a fair six-sided die. After each roll you immediately receive a payout equal to the face value. If you roll 4, 5, or 6 you must roll again; the game stops the first time you roll 1, 2, or 3.

Tasks:

  1. Fair die (uniform): Derive the expected total payout. Show all steps (either by conditioning on the stopping rule or by using an infinite series).
  2. General biased die: Let p = P(roll in {4,5,6}) and let μ be the expected value of a single roll. Express the expected total payout in terms of p and μ.
  3. Per-roll cost: Suppose each roll after the first incurs a fixed cost c. Derive the break-even c that makes the game fair (zero expected net).

Assumptions:

  • Rolls are independent and identically distributed.
  • Payout is collected every time a roll occurs; the process stops at the first roll in {1,2,3}.

Solution

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