Question

At a carnival, there is a raffle with 1,000 tickets. One ticket will win a $540 prize, one ticket will win a $370 prize, one ticket will win a $30 prize, and the remaining tickets will win nothing. If you have a ticket, what is the expected payoff?

Answer 1

To calculate the expected payoff of a raffle ticket we need to calculate the weighted average of the prizepool. For that we will have to sum all the prizes and divide by the number of tickets available. This is done below:

$\text{expected payoff}=\frac{540+370+30}{1000}=\frac{940}{1000}=0.94$

The expected payoff of each ticket is $0.94