How to get amount to pay in order to be fair

If a man purchases a raffle ticket, he can win a first price of $50,000 or a second price of
$20, 000 with probabilities 0.001 and 0.003. What should be a fair price to pay for the ticket?


Less is more. Stay pure. Stay poor.
< $20K or < $50k. What do you think? Seems like homework, please show your own due diligence and we are happy to help.


TS Contributor
Fair is in the eye of the beholder. The organization selling the raffle ticket expects to earn a "fair" return for selling the ticket. Market pressures will tend to balance the different expectations onto a price that will be different from either view of a fair price.


Less is more. Stay pure. Stay poor.
I would base fair also on the number of tickets sold. If only two tickets are sold and you have a 50% chance of either prize - hmm, what would you pay?

But I guess they are giving us the number of tickets sold based on the probabilities.
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