You are presented with two envelopes, one valued at X and one valued at 2X; the average value of an envelope is 3X/2.
You choose an envelope, and do not look at the contents. You are asked if you would like to swap.
Your envelope has a definite value, call it Y.
If you have the larger of the two envelopes, the value of the other envelope is Y/2; the average value of an envelope is then (Y + Y/2)/2 = 3Y/4.
If you have the smaller of the two envelopes, the value of the other envelope is 2Y; the average value of an envelope is then (Y + 2Y)/2 = 3Y/2.
It is absurd that the average value should change depending on which of the two envelopes you have, therefore they must be equal:
3Y/2 = 3Y/4
6Y = 3Y
6 = 3
Hmmm. Let's go back.
If you have the larger of the two envelopes, then
- Y = 2X;
- the other envelope has Y/2 = X;
- the average value of an envelope is 3Y/4 = 3X/2.
If you have the smaller of the two envelopes, then
- Y = X;
- the other envelope has 2Y = 2X;
- the average value of an envelope is 3Y/2 = 3X/2.
Since Y is
defined to be whatever is in the envelope you selected, then Y has a different value
depending on which envelope you selected. It is not a constant, as X is. And therefore you cannot, after all, set the average values equal to each other: the LHS Y has one value and the RHS Y has another. X ≠ 2X.
Neither can you make this calculation:
If I have the larger valued envelope, I risk losing only Y/2 by switching, while if I have the smaller valued envelope I stand to gain Y. Y has two different values in this sentence. By definition.
Now suppose you are allowed to look, so you learn, say, that Y = 10. Won't that prevent the problem of Y changing values? It will be 10 in every equation.
Suppose Y = 10. Then either 10 = X, or 10 = 2X. Where before we had equations with
two unknowns, now we have equations with one.
Suppose you reason as follows:
If I have the larger envelope, then the other has 5 and the average value of an envelope is 7.5.
If I have the smaller, then the other has 20 and the average value of an envelope is 15.
(It is prima facie absurd that the average value of an envelope changes depending on whether you have the larger or the smaller of the two.)
The only way this can be is if our only remaining unknown, X, changes its value depending on whether I have the larger or the smaller envelope.
Since we have fixed Y, which was defined to change depending on your choice, we are forced to make X vary with your choice in order to preserve the equations. But X is a constant. Unknown, but a constant.
So what is the right way to reason, once you know that Y = 10? The simple answer is, don't. You haven't learned anything you can act on. It will turn out X = 5 or X = 10, but Y = 10 does not help you figure that out, and there is no way to calculate using Y = 10 that does not force X to vary with your choice of envelope, which is absurd.