Question

In a shopping mall, shoppers who use a reward points card get a 10% discount on every transaction. If the average transaction is $450 for customers with these cards, and $500 for other customers, what happens to the expected value of a transaction?

Answer 1

The expected value of a transaction decreases from 500 to a number between 450 and 500. Since we don't know what percentage of shoppers are using this card, we cannot determine where the new expected value of a transaction will be. For example, if 50% of shoppers use the reward points, then the expected value of a transaction would be $475.