Exercise

Exercise 4. American Roulette Monte Carlo vs CLT comparison

The Monte Carlo result and the CLT approximation for the probability of losing money after 100 bets are close, but not that close. What could account for this?

Instructions

50 XP

Possible answers

10,000 simulations is not enough. If we do more, the estimates will match.

The CLT does not work as well when the probability of success is small.

The difference is within rounding error.

The CLT only works for the averages.