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Puzzles|Views: 57|Likes: 0

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https://www.scribd.com/doc/45884230/Puzzles

12/25/2010

text

original

Florin Bidian

∗

November 15, 2009

Contents

1 Probability Puzzles 1.1 Polya’s urn and beta distributions . . . . . . . . . . . . . . 1.2 A Lewis Carrol’s absurdity . . . . . . . . . . . . . . . . . . 1.3 Borel’s paradox . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 Occurence of sequence patterns in coin tosses . . . . . . . . 1.5 Unrealiable witness . . . . . . . . . . . . . . . . . . . . . . . 1.6 Family probability . . . . . . . . . . . . . . . . . . . . . . . 1.7 Riding the brokerage account . . . . . . . . . . . . . . . . . 1.8 Guaranteed positive return . . . . . . . . . . . . . . . . . . 1.9 Rolling all 6 sides of a dice . . . . . . . . . . . . . . . . . . 1.10 The other side of the coin (related to Monty Hall problem) 1.11 One Seat Left. Is It Yours? . . . . . . . . . . . . . . . . . . 1.12 The envelope paradox . . . . . . . . . . . . . . . . . . . . . 1.13 Being average means you are obese . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 4 4 5 5 6 7 8 8 9 10 11 14

2 Other puzzles 14 2.1 Wine in water and viceversa . . . . . . . . . . . . . . . . . . . 14 2.2 Mind blowing party combinatorics . . . . . . . . . . . . . . . 15

1

1.1

Probability Puzzles

Polya’s urn and beta distributions

Problem 1. We succesively draw one ball from an urn containing black (denoted by 0) and white (denoted by 1) balls. At each draw we put back in

∗

University of Minnesota. E-mail: bidi0004@umn.edu

1

Notice that the conditional distributions are given by P (Xn = j|X1 . . white} into {0. . . by analyzing the tree process. α := (α(0). This shows that the sequence {X1 .} is exchangeable.Let α(0) := x. t+1 }. Indeed. . it is easy to see. . . The general case is much harder.the urn the extracted ball and an additional identically colored ball. (1) where m[n] := m(m + 1) . . Xn = xn ] = P [Xπn (1) = x1 . . .1 Thus we 1 This means that P [X1 = x1 . . . where α is interpreted as a measure on X . . concretely it puts probability t+1 1 on each point in the set { t+2 . Let Zt := Yt0 /(Yt1 + Yt0 ) be the fraction of black balls. .s. It will follow easily then that the t+2 limiting distribution of Zt is uniform on [0. .g) P [X1 = x1 . that the distribution of balls at each draw in the urn is uniform. . This process is a martingale. We want to ﬁnd the general answer for arbitrary starting number of balls of each color (even non-integer). Xn−1 ) = α(j) + n−1 i=1 δXi (j) α(X ) . . For (α(0).. . . Et Zt+1 = Yt0 Yt0 + 1 Y1 Y0 + 1 t 0 1 t0 = Yt0 Yt1 + Yt0 = Zt . that 1 Zt is distributed as a “uniform” variable. For simplicity. . 1) it is easy to see. by induction. . Thus the ﬁnite dimensional distribution are after rearranging (convince yourself by analyzing the case n=4. 1]. Xn . . I map the names {black. (m + n − 1) represents the ascending factorial. who considers only the case in which initially the urn contains one white and one black ball. e. . Yt1 + Yt0 Yt1 + Yt0 + 1 Yt + Yt Yt + Yt + 1 So indeed we know that it will converge a. What happens in the limit with the fraction of white balls. α(1)) = (1. Xπn (n) = xn ]. and in L1 (have not checked but very unlikely not to be a uniform integrable martingale sequence). This implies that Yt1 + Yt0 = t + α(0) + α(1). Xn = xn ] = α(0)[ n i=1 δxi (0)] · α(1)[ α(X )[t] n i=1 δxi (1)] . . and thus α(X ) = α(0) + α(1). . 1} (in this order). where δi (j) = 1 if j = 1 and is zero otherwise (Dirac measure at i). . 1} be the color of the ball extracted at draw t. . . . . Clearly Ytj := α(j) + t δXn (j) represents the number of balls n=1 of color j ∈ {0. In this particular case. α(1)) and Xt ∈ X := {0. 1} after extraction t. α(1) := y. 2 . if we start with x black balls and y white balls? This puzzle is a generalization of the “magnetic dollars” puzzle in Winkler (2004).

. . Xn ) = P (X1 .can apply de Finetti’s theorem. . we plug this density in (3) and use (2) to get P (X1 = x1 . which is characterized by the density f (x. are iid Bernoulli taking value 0 with probability θ and 1 with probability 1−θ. . or the prior Beta(α). as a generalization of the uniform distribution. . . Zn = n + α(X ) This means that the limiting distribution of {Zn } is the distribution of Θ. α(1)) distribution. conditional on Θ = θ. . 1 where we used (1) through (4). we see P (θ|X1 . . . by the LLN. . . . . α) = Γ(α(0) + α(1)) α(0)−1 x (1 − x)α(1)−1 . 1]. . . for all n and any permutation π n on 1. α + P (X1 . Xn = xn ) = Γ [(α + Γ(α(X )) Γ(α(0))Γ(α(1)) n 1 δxi )(0)] Γ [(α + Γ(α(X ) + n) n 1 δxi )(1)] . 1]. What is the connection between the posteriors (prior being trivially a posterior) and the limiting distribution of the fraction of balls of each color? Notice that conditional on Θ = θ. which means that there is a unique distribution Θ on [0. X2 . . . The general result is a bit surprising as one might have expected a linear density. Xn ) n δXi ). in this case? Forcing the notation (by calling probability of a point the density at that point). . . (3) We conjecture that the prior Θ is the Beta(α(0). Γ(α(0))Γ(α(1)) (4) To verify this conjecture. ∀x ∈ [0. 3 . . . . remembering that Γ(k) := (k − 1)! amounts to exactly expression (1). Since Beta(1. 1) is the uniform distribution on [0. . In other words. (2) P (X1 = x1 . . the case studied directly is conﬁrmed. n. 1] (a prior) such that for X1 . . . . Xn = xn |Θ = θ)dΘ(θ). Xn = xn ) = [0. . .1] n 1 δxi (0) (1 − θ) n 1 δxi (1) . α(0) + n δXi (0) 1 → θ. What are posterior distributions. P (X1 = x1 . which. . . . . . . Xn = xn |Θ = θ) = θ and P (X1 = x1 . Xn |θ)P (θ) = f (θ.

Where is the error in the reasoning? It is quite subtle.WWR (equally probable states). the distribution of latitude is non-uniform (it is proportional 4 . or calculate it as 1 · 3 + 2 · 1 + 1 · 1 = 3 . on the Earth. But with 3 balls in the urn. supposing its form is a sphere). Let a random point be chosen uniformly on the surface of a sphere (e. Hence the probability of extracting a red ball is 2/3 (either count the frequency of R vs W in the 1 2 states. p. so the unconditional probability of extracting a red would have been 1/2.3 Borel’s paradox Szekely (1986.g. The computed 2/3 probability is NOT the unconditional probability of extracting a red ball from an urn with three balls of unknown colors.e. But then it means that initially there were 1 red and 1 white ball . The position of a point is generally given by its longitude and latitude. Hence the 2/3 probability does not signify that two balls will be red. Consider an urn containing two balls.68) Problem 2.) the Greenwich meridian being big circles and seemingly playing a symmetric role.. Thus despite the equator and (e. the conditional distributions (conditional on being on one of those circles) diﬀer. thus the probability that the original urn had the RW composition is 1/3 rather than 1. the distribution of the longitude is uniform.ABSURD. p. the state WWW would have been also possible. Given a latitude. that can be red or white. but given a longitude.2 A Lewis Carrol’s absurdity Szekely (1986. Notice that the probability of the event RRW given the existence of a red ball (i. where we used P (B) = 3 3 3 3 i P (B|Ai ) · P (Ai ) if Ai are disjoint and cover the whole space (the three states in our case). but rather the conditional probability of extracting a red ball knowing that the urn contains at least one red ball. Add one red ball to the urn. 1. In an urn with no additional information.RWR. omitting the 4-th state WWW) is 1/3.g. and the reasoning breaks down when inferring from the probability of extracting a red from an urn with partially known composition the frequency of red balls in the urn as if no information would have been available. Thus the composition of the urn is one of the following: RRR.65) Problem 3. and a probability of extracting a red ball equal to 2/3. it must be the case that there are 2 red and 1 white balls in the urn.1.

When calculating conditional probabilities. thus we need to compute P (X = T |X1 = T. On an occasion. a meridian is surrounded by biangles (the shape of the peel of an apple slice). given that i occurred in the ﬁrst toss. thus MH + MT = 4. . Surprisingly though. the pattern HH appears after 6 tosses on average.4 Occurence of sequence patterns in coin tosses Szekely (1986. 2n+1 − 2. Similarly. X2 = T ) = 5 P (X = T. p. X2 with values in {T.55-57) Problem 4. given that i occurred in the ﬁrst toss (including this ﬁrst toss).with the cosine of the latitude). one should take into account the fact that while the equator is surrounded by spherical zones (rings). Notice that MH = 1 + (1 + MT )/2 and MT = 1 + (MH + MT )/2. They lie with the probability of 2/3. and sequences HH . . We know that both agents declare the statement true. .5 Unrealiable witness Winkler (2004) Problem 5. What is the probability that it was indeed true? We can think at the agents 1 and 2’s pronouncements as random variables X1 . X1 = T. again taking values as true/false. hence the average expected time until HH appears is (MH + MT )/2 = 6. let Mi be the expected number of tosses until HT occurs. for i ∈ {H. X2 = T ) P (X1 = T. F } (“true”. Thus MH = 1 + (1 + MH )/2 and MT = 1 + (MH + MT )/2. The inhabitants of an island tell truth one third of the time. T }. Let X the random variable representing the veracity of the statement. while the pattern HT appears after only 4 tosses. It can be shown that n-length sequences HH . X2 = T ) . We obtain MH = 5 and MT = 7. 2n . Indeed. another fellow stepped forward and declared the statement true. which pattern will occur ﬁrst: HH or HT? It is clear that the probabilities of one pattern occurring before the other are equal. In a sequence of coin tosses. 1. . after one of them made a statement. let Mi be the expected number of tosses until HH occurs. H have the the longest average times to occurrence. HT occur on average after the shortest number of tosses. 1. respectively “false”). Thus MH = 3 and MT = 5.

Thus the expected number of men’s sisters are E[X(n − X)]. males have zero female siblings while females have n(n − 1) siblings. if each family is trying to have a male son. X2 = T ) = P (X1 . we just need to prove that 2E(X 2 ) = E[(n + 1)X]. However this does not take into account the distribution of male and female siblings in a family of given size. Clearly 2E(X 2 ) = 2 n n n(n + 1) + ( )2 = = E[(n + 1)X]. What makes it counterintuitive is that for example. Let us consider a random family with n siblings. But X is the sum of n independent Bernoulli variables with mean 1/2 and variance 1/4. To prove that the two are equal.Notice that P (X. the expected number of men’s sisters equal the number of women’s sisters. Assume that X is a random variable with the Binomial(n.1/2). as in China.F } 1 1 1 1 1 · · = · . a woman is not counted when looking at the rest of her sisters. For example for unisex families of size n. X2 = T |X = T )·P (X = T ) = Also P (X1 . 1. It would be interesting to pursue further the problem. so it seems that this puts at a disadvantage the number of sisters that women have when compared to men. 332 332 92 Thus the required probability is 1/5. and stops after having one. X2 = T |X = i)·P (X = i) = i∈{T. while the expected number of women’s sisters is E[X(X − 1)].1/2) disttribution. For some family componence men are at a disadvantage. and assuming that each family distribution is an independent draw from the Binomial(n.1/2) distribution. X1 . for example. then Glivenko-Cantelli implies that fraction of families with k male siblings is equal to the probability of having k male siblings under a Binomial(n. 6 . 4 2 2 Thus for a randomly chosen family. for evenly balanced families. assuming that the family sizes are chosen and strategized upon. 3 3 2 9 2 P (X1 . Do men have more sisters than women? The answer is: the same. X2 = T ) = 111 221 51 + = . Assuming that the these number of families is large.6 Family probability Problem 6.

Let wt be the wealth of the agent. . If the asset price would increase by a factor k instead of doubling. . bt the amount borrowed and θt the number of shares of stock one enters period t with. b0 = 0. pt the price process. since one can work with the usual tricks on Rieman sums. The assumption of constant growth in prices should not be relevant. Even better. θ0 = 0. pt+1 pt+1 or pt+1 pt+1 wt − − 1 bt+1 wt+1 = pt pt Since the price is monotonically increasing. 1 2 n Assume that the t ∈ { n . Assume that you have one dollar two invest in a stock that will double in value in one year and it will never experience a price decrease.7 Riding the brokerage account Problem 7. with bt+1 ≥ − 1 wt (and smaller than zero) and w0 = 1. We need to compute n→∞ lim 3 a 1 en − 2 2 n Notice that using L’Hopital. Clearly wt = pt θt + bt . n }. 7 . if you exploit the allowed leverage at the maximum? I will assume that trading occurs at ﬁnite intervals at the beginning. . Thus 2 wt+1 = 3 pt+1 1 − 2 pt 2 wt . We know that pt θt+1 + bt+1 = pt θt + bt . Thus 2 we obtain pt pt wt+1 + 1 − bt+1 = wt . x→0 x 2 lim Thus the required limit is e3a/2 = 23/2 . n . then the result would be k 3/2 . However you invest in the stock through a brokerage account that allows to borrow an extra 50% of your wealth. What is your terminal wealth. one would write this problem in continuous time and obtain the solution directly. . and then pass to the limit. Assume that the rate of price appreciation a is constant (a = ln 2).1. the borrowing limit will be maxed out and hence bt+1 = − 1 wt . ln( 3 eax − 1 ) 3 2 2 = a.

y) ∈ A. Hence the portfolio (a. where p is the probability of success in a single experiment. Form a portfolio with positive return in any state. thus there is a support hyperplane (a. Thus E(Yi ) = E(Yi−1 ) + Since E(Y1 ) = 6 . Let Yi denote the number of rolls until i distinct faces are observed. Solution 1. 6 − (i − 1) . which is a bit blurred and takes an eﬀort to swallow.9 Rolling all 6 sides of a dice Winkler (2004) Problem 9. Here I oﬀer a couple of clear solutions. b) at this set at point (x0 . it follows that 6 E(Y6 ) = 6 6 6 6 6 6 + + + + + = 14. y0 ) = (y0 . What is the expected number of rolls until you see all six faces of a dice? The direct approach. There is also the solution in Winkler’s (2004) book. 1. since f is diﬀerentiable it follows that (a. y) : xy ≥ x0 y0 } is convex. The set A := {(x.7 1 2 3 4 5 6 8 6 . x0 ). Let x0 . Notice that E(Yi ) = E[E(Yi |Yi−1 )] = E[Yi−1 + E(Yi − Yi−1 |Yi−1 )] Notice that E(Yi − Yi−1 |Yi−1 ) = 6 . computing the probabilities of seeing the faces in 6 rolls. ∀(x. b) satisﬁes the requirement. with i ≤ 6. Let Xi denote the realization of roll number i.8 Guaranteed positive return Problem 8. 7 rolls etc is horrendous and unmanageable. y0 the initial prices of the two stocks.1. b) = f (x0 . You know for sure that the product of the prices of two stocks at the end of the year are going to be higher then their product now. 6 − (i − 1) Here I used the fact that the expected number of independent repetitions of an experiment until success is observed is 1/p. y) := xy. Hence ax + by ≥ ax0 + by0 . We need to compute E(Y6 ). Letting f (x. y0 ).

. A two-headed coin. interpreted as the up faces of the three aligned coins. Notice that E(Zi |X1 = 1) = . t1 } × {t2 . E(Zi ) = E[E(Zi |X1 )]. We will have to compute E(Z6 ). For i ≤ 6. . One of the coins is drawn at random and ﬂipped. h2 } × {h3 .Solution 2. a two-tailed coin and an ordinary coin are placed in a bag. t3 }. it comes up “heads”. and the ﬁrst coin is interpreted as the tossed coin. . What is the probability that there is a head on the other side of the coin? The probability space here is the permutations of the triplets in the set {h1 . i. Clearly E(Z1 ) = 1 . . . i 6 6 6 6 6 6 + + + + + = 14. Thus or Thus E(Z6 ) = 6−i i [1 + E(Zi )] E(Zi ) = [1 + E(Zi−1 )] + 6 6 6 E(Zi ) − E(Zi−1 ) = . = E(Zi |X1 = 6) = 1 + E(Zi ). We use the following notation • H = the event that the ﬁrst coin shows head on the hiden side • Hi = the event (state) that the visible face of the ﬁrst coin is hi Then P (H|H1 ∪ H2 ∪ H3 ) = P [H ∩ (H1 ∪ H2 ∪ H3 )] = P (H1 ∪ H2 ∪ H3 ) 3 1· 1 +1· 1 +0· 1 2 i=1 P (H ∩ Hi ) 6 6 6 = = = 1 P (H1 ∪ H2 ∪ H3 ) 3 2 9 . let Zi denote the number of runs until I observe faces 6 1. . .10 The other side of the coin (related to Monty Hall problem) Winkler (2004) Problem 10. 2. .7 6 5 4 3 2 1 1. = E(Zi |X1 = i) = 1 + E(Zi−1 ) E(Zi |X1 = i + 1) = .

Nothing matters until either my seat gets taken or his seat gets taken. More precisely. Now. that passenger will take any seat at random. So your chances are one out of two. . if that seat is taken. you are the last passenger to walk onto the plane. PBS radio Problem 11. will have his assigned seat. every other passenger will take either his assigned seat or. After a bit of thinking (enumerating cases). there are no more displaced passengers. Obviously. my seat (#100) and his seat (#1). (notice that guy #100 takes seat 1) 10 . . seat n cannot be occupied. You’re one of a hundred people standing in line to get onto an airplane that has 100 seats. and half the time his seat is going to get taken by a displaced passenger. And how often does that happen? One time out of two. ”I’m just going to sit anyplace. generous. because everyone else is sitting in his correct seat. player 1 picks position 1 or n with equal probability. Also. If his seat gets taken by some displaced passenger then every other passenger who walks onto the plane including me. If my seat gets taken by some displaced passenger. since as soon as seat 1 is occupied. .” He takes a seat at random. . seat 1 must be free. Because you are such a kind. The question is: What are the chances that you get to sit in your assigned seat? There are only two seats that count.11 One Seat Left. or not. we see that: • There is only 1 conﬁguration in which guy #1 takes seat 100. then I have zero chance of getting my seat. those people are going to take some seat or another. Let’s count all the possible conﬁguration of seat assignments. instead of picking it up. if his seat was taken. Is It Yours? ”Cartalk”. Whoever gets on the plane subsequent to him. (notice that guy #100 takes seat 1) • There is 1 conﬁguration in which guy #2 takes seat 100. and accommodating person. otherwise again he would A more in-depth analysis can clarify maybe the problem. Indeed. n − 1} will occupy seat 1 or n. There’s a seat for every person who’s in line. decides. There is an equal probability that ﬂier i ∈ {1.1. All the other seats don’t make a diﬀerence. The ﬁrst person to walk onto the plane drops his boarding pass and. Half the time my seat’s going to get taken by some displaced passenger. and each of you has a boarding pass for your assigned a seat. there’s going to be one seat left. 2.

the agents expect zero gain from switching. (notice that guy #100 takes seat 1) • There are 299−2 conﬁguration in which guy #99 takes seat 100. and knowing that the one envelope contains twice as much money as the other. There are two unopened envelopes. mind-blowing. assume you see m in your envelope. A simple reasoning indicates that you will want to switch irrespective of which envelope you draw. 2 You can reformulate the problem with two people. before opening the envelope. receiving the two envelopes. 2 2 2 4 How can this be? This is especially puzzling since an equally easy and sensible reasoning reveals that the expected payoﬀ from switching is zero. 1. there are 2100−2 conﬁgurations in which guy #100 takes seat 100 This implies that the chances of taking your own place are 1/2. You open one of them randomly. and then you are given the option to switch and pick the other envelope.• There are 21 conﬁguration in which guy #3 takes seat 100. thus the net gain is zero.2 Indeed. You infer that the other envelope contains m/2 or 2m with equal probability. 11 . which should be inconsequential. check the content. Apparently both will want to switch their envelopes. (notice that guy #100 takes seat 1) • There are 22 conﬁguration in which guy #4 takes seat 100. You know that one contains twice as much money as the other. (notice that guy #100 takes seat 1) • Finally. makes you switch envelopes. discussed at length by Nalebuﬀ (1989). See the reasoning in the text. which is deeply troubling.12 The envelope paradox I ﬁnd this paradox. Thus the expected payoﬀ from switching is 1 m 1 1 ( − m) + (2m − m) = m. Hence it seems that the act of observing the content of your envelope. Indeed assume that the content of the two envelopes are y and 2y. irrespective of what you observe. If you do not observe the content of your envelope you realize that by switching you are equally likely to gain y or lose −y. Problem 12. A and B. Thus ex-ante.

by the ﬂip of a fair coin. the agent observes πS · πI rather than πS . Given a state (s. while (πS · πI ) payoﬀ conditional of observing the content of the envelope is E(πS (3 − 2πI )|πS · πI ) = πS · πI · (3E (1/πI |πS · πI ) − 2) . Thus s is interpreted as the amount of money in the envelope containing the smaller amount. (m. This reﬂects the fact that the envelope shown to the agent is randomized among the two envelopes. You observe πS ×πI . Therefore. I will formalize it completely. The expected net {(s. which is the amount revealed by the envelope to the agent). Let I = {1.To shed some light into the problem. it does not depend on πS · πI . B(S) ⊗ 2I . both always want to exchange envelopes. Indeed. netting you an additional πS (3 − 2πI ). and i is the multiplication factor drawn by consumer (double or not. and you have the option to keep this amount or switch. It also happens if πI is independent from πS · πI . 1).e. Thus in a two-person formalization. i. I are independent (hence the product measure on S×I). πS (s) = −1 (m) = {(m/2. The probability space is (S × I. Mathematically.e. he should be indiﬀerent. draw the fat or the skinny envelope). Let S := R++ or if one insists on working with discrete spaces. The “sensible” approach to the decision problem (ex-ante reasoning). πI of S ×I on S. At the heart of the paradox is our gut instinct (and ﬂawed reasoning) that the probability of the agent having the low envelope when observing x 12 . is for the agent to realize that irrespective of the amount πS that can be gain or lost by switching (i. this amounts to saying that E[πS (3 − 2πI )|πS ] = πS · E(3 − 2πI ) = 0. PS ⊗ PI ). simply assumes E (1/πI |πS · πI ) = 1 E(1/πI ) = 1 1 + 2 1 = 3 . However. The “incorrect”. hence the randomization device is not dependent on the content of the envelopes (on s). (s. no matter what you see. the paradox can be rephrased. 2)}. outlined at the beginning. the consumer sees the amount s · i. which is indeed the case. What will you choose? The paradox rests on you always preferring to switch.e. then S := {2n |n ∈ Z}. 2). 2}. The σ-algebras −1 generated by πS and πS · πI are not ordered by inclusion. or puzzling reasoning. i) ∈ S × I. This happens for example if E (1/πI |πS · πI ) is 2 2 4 constant (i. and the projections πS . 1)}. The net payoﬀ of the switching strategy is given by the random variable πS (3 − πI ) − πS πI = πS (3 − 2πI ). as follows. the amount in the lower envelope). in technical terms. Notice that PI is the uniform distribution on I.

2 P (πS = x) + 2 P (πS = 2 ) The only way for the conditional probabilities of observing the high or the low envelope to be equal (which is built in our subconscious) is if f (x) = f ( x ). 2 2n This is a valid probability density function on the set of powers of two with natural exponent. and the integral of this function diverges and cannot represent a proper probability density. that is the envelopes contain only integer (or natural. P (πI = 1|πS · πI = x) = P ((πI = 1) ∧ (πS πI = x)) P (πS πI = x|πI = 1)P (πI = 1) + P (πS πI = x|πI = 2)P (πI = 2) 1 2 P (πS = x) = 1 1 x . This argument does not work if one assumes the discrete form for S. Thus 2 2 1 the agent is willing to switch if and only if f (x) ≥ 2 f ( x ) for all x > 0 2 (assuming continuous support). Thus 2 k there exists a constant k (equal to g(0)) such that f (x) ≥ x . which kind of means that g is increasing. But this implies that PS (f ) is uniform. In fact. The downside with this solution is that the expected amount contained in the envelope is inﬁnite. Using the Bayes rule (and some heuristics). and there is no uniform 2 density over naturals (integers) (“the monstrous hypothesis”). that is if S = {2n : n ∈ N}. one containing twice the amount in the other. But this implies that g(x) := xf (x) must satisfy g(x) ≥ g( x ). Thus one feels that 1 P (πI = 1|πS · πI = x) = P (πI = 2|πS · πI = x) = 2 . and the expected proﬁt from switching is zero. ∀x > 0.is equal to the probability of holding the high envelope. f (x) + f ( x ) 2 Thus E(πS (3 − 2πI )|πS · πI = x) ≥ 0 if and only if f (x) ≥ 1 f ( x ). if one is not bothered by the existence of a lower bound) powers of 2. It follows that the expected net proﬁt from switching is E (1/πI |πS · πI = x) = 1 x 2f(2) + f (x) . f (x) := P (πS = x) (the “density” of the marginal PS on S). I can modify f slightly to make it strictly proﬁtable to switch. hence the agent is indiﬀerent between switching or not. for simplicity. and is reminiscent of the St. and they 13 . for discrete amounts. The envelope paradox can be formulated as a two person problem. Let. Petersburg paradox. There are two envelopes. one can choose f (2n ) = 1 1 · .

One transfer a spoon of wine in the water. and replace φI everywhere by φI . By the low of iterated expectations and Jensen’s inequality. Assume that the dollar/euro rate in the future is equally likely to be 1/2 or 2. If we let πI := 3 − πI . Actually is clear that since the bottles end with the same volume of liquid. The paradox is related to Siegel’s paradox. Assume also that the forward rate is 1 (but this is not necessary). the formulas are unchanged for the second agent. and then transfer a spoon of water (with wine traces) back into the wine bottle. but the conclusion still holds). and hence proportional with the cube of height H (some argue that the empirical relationship is closer to the square rather than the cube of height.13 Being average means you are obese Problem 13. A simple illustration of the paradox is the following. Thus the expected weight of an average height person is cE(H)3 . The paradox is that apparently both agents want to switch. and of course the water 14 . E(W |H) = cH 3 . average weight conditional on the height is proportional to the cube of height. all the wine missing from the wine bottle must be in the second. and the current spot rate is 1. Which of the two bottles contains more foreign substance? One is tempted to go into computing proportions. let it homogeneize. 1.are assigned to two persons by ﬂipping a coin. the net proﬁt from switching is πS (3 − 2πI ) = −πS (3 − 2πI ). For example. Show that an average height and weight person is overweight. 2 2. one ﬁlled with water and the other with wine. Assume that US and EU consumers (investors) are risk neutral so there should be no gains from trade in forex. But πI and πI have identical distributions and can identical reasonings apply.1 Other puzzles Wine in water and viceversa Problem 14. Everything written before applies to the ﬁrst agent. The idea is that weight W is proportional to volume. E(W ) = E(cH 3 ) > cE(H)3 . etc. Then both types of agents will beneﬁt from trading in forex. To be exact. which shows that the average weight in the population is greater than the average weight of the average height person. There are two identical bottles. The mathematical discussion is identical.

Person 7 shakes the hand of everyone except his wife and person 0. Winkler. Szekely. have (how many unknown persons for Tess existed at the party)? It follows that the party attendants. . polls every other person and ﬁnds out that each shook hands with a diﬀerent number of people. The host. 2. 1. so it cannot shake hands with person 6. thus it is the spouse of 6. 3(1). B. Thus the same amount of foreign substance is found in both bottles. Akademiai Kiado. thus all persons except his wife will have labels greater or equal to 1 and thus his wife must be the person with label 0. There are 5 couples at a party and each person shakes hands with the persons he does not know. (1986): Paradoxes in probability theory and mathematical statistics. 1 edn. shook the hands of 0. Person 8 shakes the hand of everyone except his wife. I refer to persons by the number of persons that shook their hands.” Journal of Economic Perspectives. thus Tess shook the hands of 4 person. . G. (2004): Mathematical Puzzles: A Connoisseur’s Collection. References Nalebuff. 2. Similarly. It follows that 4 is the spouse of Mike. Mike.it replaces must end up in the wine bottle. except Mike. Tess. . 8 persons. 171–181. How many handshakes did his wife. 5 and 3 are spouses. Similarly. 15 . person 6 shakes hands with everyone except his wife and person 0 and 1. (1989): “Puzzles: The other person’s envelope is always greener. Notice that person 2 shook the hands of person 8 and 7. P. it follows that person 1 is married to person 7. AK Peters.2 Mind blowing party combinatorics Problem 15. Since person 1 shook already hands with person 8. .

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