Bets and decisions · Insurance · difficulty 2 of 5
Worth the deductible
There is a 20% chance your phone has an accident this year, and it never has more than one. If it does, the repair costs an amount uniformly distributed between $0 and $1,000. Your insurance has a $200 deductible: it pays the repair cost minus $200, or nothing if the repair costs less than $200. What is the expected amount, in dollars, the insurer pays you this year?
Answer with an expected value. First lock in a gut guess with an 80% range, then solve it properly, then watch a simulation settle on the truth.
More betting and decision puzzles
- Paid the square · Dice game
- The three-leg parlay · Sports betting
- To guess or not to guess · Exam strategy
- A call option on dice · Trading desk
- Chasing the flush · Poker
- Chuck-a-luck · Carnival
All betting and decision puzzles · All puzzles · Market making game