I can say with absolute certainty that I would trade if I had $1, and I wouldn't if I had $100

12/28/2009 6:51:30 PM

the normal distribution thing means that $50 is the most likely amount to have in your envelope if that helps

12/28/2009 6:56:04 PM

I <3 this thread

More games:

A man gives you an envelope. Then he says he has another envelope with 50/50 chance of having twice as much or half as much money as in the envelop you own. Do you swap?

What if instead, to begin with, you were given the choice of an envelope, one contained twice as much as the other. You pick some envelope and are then offered the chance to swap. How is this situation different than above?

12/28/2009 7:17:14 PM

wat

12/28/2009 7:25:26 PM

in my question you don't trade, thats the answer

12/28/2009 7:36:26 PM

I would flip for $50k, if the amount offered was $10k, I would take the amount offered.

Although the "what ifs..." would kill me after making the decision.

12/28/2009 7:40:36 PM

I could launch into a tirade about risk-neutral, risk-averse, and risk-taking personalities as a function of economics, particularly with regard to development. But if I did that, I'd kill myself. Enough of that nonsense last semester.

What I will say, however, is that for the OP's hypothetical question to be really effective, it should be a choice between:

1) A situation where you can either lose X amount of money or gain Y, or
2) A guaranteed amount of money Z, which is less than Y.

As the OP puts it, there's no real risk to taking the gamble, so people are more likely to take it. If there's a chance you could lose, however, you'll start to get some more interesting (and realistic) answers.

12/28/2009 7:47:13 PM

Quote :

"in my question you don't trade, thats the answer"

Why would you not trade if your envelope had a buck in it?

12/28/2009 8:00:45 PM

suppose I offer to trade, then my opponent knows I've got <50$. therefore he will not be willing to trade if he has >=49 dollars. Then, i can assume he has <49$. He knows that I can assume this, so he must assume that I have <48$ or I wouldn't want to trade, if he still wants to trade, knowing this, I can assume he has <48$. proceed this way and you'll eventually conclude that at no point would there be a consensus on when you should trade

[Think "Never go against a Sicilian when death is on the line"]

[Edited on December 28, 2009 at 8:17 PM. Reason : .]

12/28/2009 8:13:31 PM

pooljobs, bro.

if you want to give some mind blowing realization, just give it. this spreading things over several posts is doing nothing for you.

12/28/2009 8:22:51 PM

Quote :

"how much money would you need in the envelope to be happy? (there is a discrete correct answer to this question) "

there isn't a discrete correct answer to this question. you know for certain that the envelope contains at least a dollar in it that you didn't have before. If you're not happy with free money, regardless of how much your friend got, you're just a selfish bastard.

12/28/2009 8:40:13 PM

GrumpyGOP, After what you said and looking at mine, mine feels more like a situation where you have already won $5k, but you have to risk it all in one go... Which is definitely a real game show scenario...

Like I mentioned, I'd probably sacrifice a guaranteed $1000 to have a chance at winning $50k, but I probably wouldn't spend $1000 of my own money at a 50/50 shot at $50k because I honestly only have like $5k to my name. For me, taking the guaranteed $5k would double my net worth. lol

12/28/2009 8:45:28 PM

1985 gave the basic answer

how about this, in let's make a deal do you change your answer if given the choice?

12/28/2009 8:46:13 PM

^You gotta give the whole question.


In Let's make a deal, you;re the contestant. You have three doors to pick from, and only one has a prize behind it. The other two got nuthin'.

You pick a door. Monty Hall opens one of the othe rtwo, and shows you that there's nothing behind it. Then he asks you if you want to keep your originial pick, or switch to the only remaining door. Should you switch or not?

12/28/2009 9:22:23 PM

i assumed everyone knew lets make a deal, that might not have been a safe assumption

12/28/2009 9:25:49 PM

I'd take the five grand.

Mama didn't raise no fool.

12/28/2009 9:31:50 PM

Quote :

"suppose I offer to trade, then my opponent knows I've got <50$. therefore he will not be willing to trade if he has >=49 dollars. Then, i can assume he has <49$. He knows that I can assume this, so he must assume that I have <48$ or I wouldn't want to trade, if he still wants to trade, knowing this, I can assume he has <48$. proceed this way and you'll eventually conclude that at no point would there be a consensus on when you should trade [Think "Never go against a Sicilian when death is on the line"]"

Where'd all the back and forth come assuming come from? There's no still wants to trade You've got a buck, he doesn't know it. He's got five bucks (for example), you don't know it.

You: Wanna trade?
Friend: yeah.
*trade happens*
Friend:dagnabbit.

You'll both be liable to trade at some value under $50.

12/28/2009 9:33:28 PM

ok i should have made the statement that for anyone that is not an idiot the right choice is not to trade

12/28/2009 9:40:22 PM

haha, lol @ dagnabbit

12/28/2009 9:50:46 PM

anyone else wanna chime in on this? or have anymore cool problems like this?

12/29/2009 7:17:14 PM

Quote :

"ok i should have made the statement that for anyone that is not an idiot the right choice is not to trade"

No, if I'm willing to trade, my friend knows I've got less than $50. If he's also willing to trade, I know he's got less than $50.

Anything after that is just a guess on either person's part. If both amounts are sufficiently under $50 that each person thinks it's likely that the other has more money in their envelope, then a trade will likely happen.

12/29/2009 7:55:59 PM

so $50 is the most likely amount. you would want to trade if you had less, and so would your friend. so you both have less than $50, so lets say you would trade if you have more than $25 and keep it if you had more... and so would your friend. so if you both want to trade you would both have less than $25 so lets say you trade for anything under half that and keep anything more, but so would your friend.

the limit of these iterations is $0, the best choice is to not trade

its game theory, you have to remember that your friend is also thinking. the limit of the solution is that it doesn't work when someone acts illogically, like the idiot in your example.



[Edited on December 29, 2009 at 9:10 PM. Reason : .]

12/29/2009 9:08:49 PM

id take the 5000 and run

this is just like deal or no deal

12/29/2009 9:19:41 PM

Nichole, would you give up $2000 for a coin flip shot at $50k?

12/29/2009 10:22:49 PM