The Pelayo Family Plays Roulette
Bodily, Samuel E.,...
The Pelayo Family Plays Roulette
Bodily, Samuel E.; Pfeifer, Phillip E.; Baucells, Manel
QA-0850 | Published August 11, 2016 | 2 pages Case
Collection: Darden School of Business
Product Details
The Pelayo family has been studying roulette wheels and collecting data on tens of thousands of spins. Now the Pelayos have identified a wheel that they want to bet on, which has six numbers that have a 1/30 probability of winning instead of 1/37. They have staked EUR1,000 on this wheel. The question is: How much should they bet in order to have the most capital after 200 rounds? Log utility is used to compare alternatives and find an optimal bet.
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