Re: JNU 2010

Posted by Amit Goyal on May 13, 2013; 4:16pm
URL: http://discussion-forum.276.s1.nabble.com/JNU-2010-tp7580642p7580652.html

Work backwards. If you are taking the test the third time, you have to accept whatever comes. If you are taking the test the second time then you will not accept the score of below 50 because you know that rejecting it will give you a higher average score of 50. So, you will reject all scores below 50 and accept all above 50. Thus you will get average score of 75 with probability 1/2 (you only accept scores in the second test ranging from 50 to 100) and 50 with probability 1/2 (you reject scores in the second test ranging from 0 to 50 and thus will take the test the third time and get an average score of 50). So, when you are take the test for the first time and get its score your opportunity cost of accepting the first score is now (1/2)75 +(1/2)50 = 62.5. So, you will accept the first score if it exceeds 62.5 and reject otherwise.