Question: Presenting bets as a probability or relative frequency. Tunney (2006) was interested in various probability relationships. Specifically, he was interested in how the presentation of probabilities (either as a probability or as a frequency) influenced participant choices. The following is an example of how he presented bets for frequency and probability. Both statements say the same thing for each bet but in different ways.
Based on this table,
(a) what is the mathematical expectation for winning the P-bet, and
(b) what is the mathematical expectation for winning the £-bet? Based on the mathematical expectation of making P-bets and £-bets,
(c) if you had to make one bet, which one would you make? Explain.