You are given two indistinguishable envelopes, each of which contains a positive sum of money. One envelope contains twice as much as the other. You may pick one envelope and keep whatever amount it contains. You pick one envelope at random but before you open it you are offered the possibility to take the other envelope instead.

NOTE: Think on the lines of the expected value if you choose the other envelope while holding the present envelope.

NOTE: Think on the lines of the expected value if you choose the other envelope while holding the present envelope.

There is no paradox. You should explain the problem properly. I have seen this problem before and in that problem the wrong assumption people make is the following:

ReplyDeletegive that the envelope in my hand has x$ , the other envelop has x/2$ or 2x$ with equal probability. This assumption is wrong as these probabilities differ.

Refer to http://en.wikipedia.org/wiki/Two_envelopes_problem

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