by Dan Meyer
May 05, 2014
What price would you pay for the Money Duck?
- Teacher noteHave students share their responses with their neighbors. Find the high and low in the class.
What information would be useful to know here?
What do you think this mathematical model is trying to tell you about Money Ducks?
- ImageProbability Distribution Image
Which of these probability distributions are possible and which are impossible? Why? How do you know?
- ImageImpossible & Possible Distributions
If you're selling Money Ducks for $5, why is each of these distributions bad for business?
- ImageBad for Business Distributions
Make up a price for each of these distributions so that the buyer and seller won't gain or lose money over the long run.
- ImagePrice the Distributions
- Teacher noteThis is your moment to teach Expected Value. The ball is on the tee. They've done a lot of informal thinking about EV. Now you can formalize it.
What is the expected value of each of these distributions?
- ImageCalculate Expected Value
- FileHandout w/ All These Questions
- Teacher noteAnswers
1. It tells you all the possible events for the Money Duck and the likelihood of each event.
2. B and C are impossible because the total probability exceeds 100%. D is impossible because the total probability doesn't reach 100%.
3. A is bad for business because people will eventually stop buying your ducks. B is bad for business because you're giving away a lot of $50s for only $5.
4. Answers will vary.