Séminaires LEMMA

"IS THERE A SIMPLE SOLUTION TO THE TWO ENVELOPE PROBLEM ?"

Ned Markosian - University of Massachusetts Amherst
https://markosian.net/

Mardi 13 juillet 2021 - 16 heures. Salle Maurice Desplas.

Abstract : The Two Envelope Problem is a classic problem in decision theory for which there is no agreed-upon solution. (The problem: You are shown two envelopes and told that they each contain some money, with one containing twice as much as the other. You randomly choose an envelope. Then you are offered a chance to trade for the other one. You reason as follows. “For some number, n, my envelope contains n dollars. There is a .5 probability that the other envelope contains 2n dollars, and a .5 probability that it contains .5n dollars. Hence, according to the standard way of calculating expected utilities in decision theory, the expected utility of trading = (.5 x 2n dollars) + (.5 x .5n dollars) = 1.25n dollars. So I should trade.” This is clearly the wrong result. But what exactly is the mistake in the reasoning that leads to this conclusion?) In a 2011 paper, I proposed a simple solution to this problem, and in this talk I will raise some questions about whether my proposed solution actually works.

Séminaire dématérialisé

VIRTUAL MARKET DESIGN SEMINAR SERIES

Co-organised by Olivier Bos (Lemma - Paris II), Nicolas Fugger (Cologne), Vitali Gretschko (ZEW), Helene Mass (Bonn), Marion Ott (ZEW), Martin Pollrich (Bonn) and Nora Szech (KIT), the Virtual Market Design Seminar is an open online and inter-institutional seminar.
Although inspired by seminars cancelled due to the COVID-19, we intend to continue post-pandemic.
Seminars cover all fields from market design. Talks take place bi-weekly on Monday at CET (Paris time) on Zoom.

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