If I'm given the choice between two envelopes containing money, knowing that one of the envelopes contains twice as much as the other.

Say I open an envelope that contains $1000, but then I'm told I can change my mind to exchange my envelope for the other one.

Is it always better swapping?

The rational thing is to switch choice, because if I had 1000 then the other one would be 2000 or 500,I have 50-50 chance of winning the big one, and since I could win twice the amount I could lose (1000+1000 or 1000-500), it is better to change choice.

Question

If I'm given the choice between two envelopes containing money, knowing that one of the envelopes contains twice as much as the other.

Say I open an envelope that contains $1000, but then I'm told I can change my mind to exchange my envelope for the other one.

Is it always better swapping?

The rational thing is to switch choice, because if I had 1000 then the other one would be 2000 or 500,I have 50-50 chance of winning the big one, and since I could win twice the amount I could lose (1000+1000 or 1000-500), it is better to change choice.

nikita2 · Answer

http://rspa.royalsocietypublishing.org/content/early/2009/07/31/rspa.2009.0312.full

anonymous · Answer

yes....this a is question pertaining to the game theory.

nikita2 · Answer

It is not easy)

anonymous · Answer

what you are saying is the "average" payoff is better as compared to the risk.