a. Bob has decided to skip his 1B co-op term and instead go gambling in Vegas. He has to decide between the following casino games. Use Expected Value theory to decide which game Bob should play. (6 marks)

Game	Potential Winnings	Probability of Winning
Black Jack	150, 000	.0001
Roulette	97, 000	.0002
Craps	300, 000	.00005
Poker	250, 000	.00007
Slot machines	50, 000	.0002

Blackjack EV=150,000*.0001 = $15.00

Roulette EV=$97000*.0002=$19.40

Craps EV=$300, 000*.00005 = $15

Poker EV=$250, 000*.00007=$17.50

Slot machines EV=50,000*.0002=$10

By expected value theory, Bob should play Roulette. 1 mark for each calculation and 1 mark for picking the best decision.

b. (2 marks) Bob has decided that he would like to buy a house in Waterloo to live in. The house he has picked out costs $150, 000. In weighting his options, Bob considers winning $150, 000 or more to be twice as important as winning anything less, since this way he could buy the house. Use this information in a Subjective Expected Utility Model to decide which casino game Bob should play now.

You can either weight the probabilities by 2 or the winnings, or the values from the question before. Assign weights of 2 to all outcomes of $150, 000 and more and weights of 1 to outcomes below this value. With this new information, Bob should play Poker.1 mark for knowing what to do and one for the right answer.