Paradox: Triple Or Bust
Today I have a decision problem for you.
Alice offers Bob participation in a simple coin toss game. It's called triple or bust. Alice start the game by writing an IOU to Bob for an amount of $ 1.00. Alice then makes at least six subsequent tosses with a fair coin. On each 'heads' Alice triples the IOU amount. On 'tails' she sets the IOU to zero. How much should Bob be prepared to pay Alice to participate in this game, knowing that he can repeat this game as often as he likes?
Okay, let's see: on each coin toss there is a 50:50 chance for tripling and for voiding the IOU. So on…