, Volume 36, Issue 1, pp 69-96

Two envelopes

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Abstract

“You have been given either envelopeA orB. B contains either one-half or twice the money inA. Do you want to switch? Now you open your envelope? Are you still happy to stand pat?”

Answers depend on whether you think there is an upper bound to the money inA. You should no longer be indifferent if you think there is not an upper bound, but, if you think there is a certain upper boundU, you should want to switch or not depending on whether your envelope holds less thanU.

Expected monetary values are extended to acts with infinitely many equally possible monetary values. It is maintained that though strong dominance under infinite partitions does not in the absence of an upper bound for values imply greater expected value, ‘univocal strong dominance’ is even then properly decisive for choice.