Killing A Paradox: The Two Envelopes

The so-called two envelopes paradox happens because smart people were too enthusiastic about mathematical notation. Don't let this happen to you!

NEW UPDATE:

All,

A reader at SS posed a question.

Simplified, it's this: Here is $8. In this envelope is either $4 or $16. Would you like to swap the $8 for the envelope?

The EV of the envelope is 4*(1/2) + 16*(1/2) = 10. So if you follow EV, you switch. Should you switch back (without peeking in the envelope)? The EV of the $8 is $8. Which is still less than $10. So you don't switch back.

If you follow the EV decision rule. Which is not any universal requirement.

Knowing the first amount changes everything!

Written lecture:
https://www.wmbriggs.com/post/52953/
https://wmbriggs.substack.com/p/14799...

Permanent class page: https://www.wmbriggs.com/class/