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January 13, 2006

D: Magical Thinking

“So explain it to me again… we both have envelopes and I either put $10 in or I put nothing in… and then I give you the envelope and you give me yours.”

“Or you could put $100 in. The point is you can put anything in the envelope. So can I.”

“But… why?”

“Game theory says the best outcome for you is that I put more in than you. The worst is that you put more than me.”

“What’s the catch?”

“It also says the most likely outcome is we both put nothing in. So, do you feel lucky?”

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