Someone has prepared two envelopes containing money. One contains twice as much money as the other. You have decided to pick one envelope, but then the following argument occurs to you: Suppose my chosen envelope contains $X, then the other envelope either contains $X/2 or $2X. Both cases are equally likely, so my expectation if I take the other envelope is .5 * $X/2 + .5 * $2X = $1.25X, which is higher than my current $X, so I should change my mind and take the other envelope. But then I can apply the argument all over again. Something is wrong here! Where did I go wrong? In a variant of this problem, you are allowed to peek into the envelope you chose before finally settling on it. Suppose that when you peek you see $100. Should you switch now?Would you become so intrigued that you would ask to join the conversation?
(Here's the solution to the problem.)
ADDED: Let me be clear: I was not the eavesdropper! I was one of the original conversationalists, but I was not the person who introduced the topic. Of the three persons described here, I was the one demonstrating the least nerd cred.