I can also engage in second-order guessing, skewing my own answer to counter what I think Naj might choose.I'm not sure how big that effect might be, but it does change the odds from pure 50/50 by introducing a non-random element.It does not, Fry got it in one.I choose the colors in the box, but YOU choose the color.If I make it 80-20 red, you can choose red. If I know you like red, I can make it 75-25 black, but you can know that I know and choose black. You can blindly choose a color by the second hand of your watch.It is 50/50. [Hence a 1-time trial, I cannot learn from you and skew the odds if I discover you will always guess Red.]Game 1 is about risk: we have clearly outlined and understood the risk, EV is $5k, we apply our own personal risk discount, and voila! $4k to play for a 50% chance of $10k. Game 2 has the *same* risk, but also contains uncertainty. You make this point by calling it a 'guessing game,' [one you can choose not to play however, just look at your watch or remember if your license plate is odd/even.]People, investors, poker players HATE uncertainty. They are willing to pay less to play Game B -- that's you and virtually everyone else Al --than Game A, even though the risk/reward is identical. Your EV in all cases is $5k. The Game B EV is more uncertain in our minds, so we discount it more than in Game A.
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