CS 4960 Fall Semester 1999

Problem 9-3

Assigned: 21 October 1999 Due: 2 November 1999

Simulate the St. Peterburg game of chance: a player tosses a fair coin until a head appears. The payoff to the player is $2^x, where x is the number of tosses made until the coin comes up heads.

The question to answer is: What is a fair price to pay in order to play the game? (One should be willing to pay $2 since that is the minimum payoff.)

Develop a simulation to answer this question.