Probability

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A friend posed a problem that according to him reveals an inconsistency in mathematics. There are two envelopes with money in them, and you are given one envelope. One envelope has twice the amount of money as the other, but you don't know which one is which. The question is, if you are trying to maximize your money, after you are given your envelope, should you switch to the other envelope if given the chance? One analysis is: let a denote the smaller amount. Either you have a or 2a in your envelope, and you would switch to 2a or a, respectively, and since these have the same chance of happening before and after, you don't improve and it doesn't matter if you switch. The other analysis is: let x denote the value in your envelope. The other envelope has either twice what is in yours or it has half of what is in yours. Each of these has probability of .5, so .5(2x) + .5(.5x) = 1.2x, which is greater than the x that you started with, so you do improve and should switch. Is there something wrong with the latter analysis? If so, where does it go wrong? Does this bear on inconsistency in mathematics or in probability?
Accepted:January 2, 2009

Accepted:

January 2, 2009