Suppose I tell you I have an infinite supply of unfair coins. I pick one randomly and flip it, recording the result. I've done this a total of 100 times and they all came out heads. I will pay you $1000 if the next throw is heads, and $10 if it's tails. Each unfair coin is entirely normal, whose "heads" follow a binomial distribution with an unknown p. This is all you know. How much would you pay to enter this game?
I suppose another way to phrase this question is "what is your best estimate of your expected winnings?", or, more generally, "how do you choose the maximum price you'll pay to... (read 175 more words →)
Indeed, terse "explanations" that handwave more than explain are a pet peeve of mine. They can be outright confusing and cause more harm than good IMO. See this question on phrasing explanations in physics for some examples.