Two-envelope paradox explained (wonkish)

3 May, 2015 at 20:40 | Posted in Statistics & Econometrics | 1 Comment

 

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  1. The Morrell paradox, I think it is called, is slightly different from this. In it, you look at what is in the envelope before deciding whether to switch or not. What I noticed, and what some other people that I am aware of have noticed, is that, given that the envelopes contain X or 2X, you can do better than 1.5 X, on average. I do not know the best strategy, or if there is a best strategy. The simplest strategy I know of to do that is to pick a value, Y, beforehand, and switch if A, the observed value, is less than Y. Another is to switch with odds equal to Y:A.


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