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:
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Fair die (uniform): Derive the expected total payout. Show all steps (either by conditioning on the stopping rule or by using an infinite series).
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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.
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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:
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Rolls are independent and identically distributed.
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Payout is collected every time a roll occurs; the process stops at the first roll in {1,2,3}.