After the first project has been implemented, investors select a new project, which again is equally likely to be of the type that has a high (75%) or low (25%) success probability. The implementation of the project will follow the same procedure as before.

The third project

Finally, a third project is to be implemented. However, in this case the situation changes: You can either proceed with the second project or choose to change to a new project.

If you choose to proceed with the second project, it is going to be implemented once more. It will still have the same success probability as before, meaning that if you chose a project with a high success probability of 75% it still has that success probability of 75%, and similarly for a project with a low success probability of 25%.

Of course, a previously successful project need not necessarily have to be of the high success probability type, and an unsuccessful project need not necessarily have to be of the low success probability type.

If, instead, you choose to change to a new project, you will choose from a set of 8 new projects. These projects are again equally likely to be of the high (75%) or low (25%) success probability type.

Note that new projects can have different earnings, both if successful or unsuccessful. You will be informed about the new earnings before choosing whether to stay with the current project or switching to a new one.