The Motley Fool Discussion Boards

Previous Page

Investment Analysis Clubs / Macro Economic Trends and Risks


Subject:  Re: 5 Statistics Problems To Change Your View Date:  11/26/2012  7:44 AM
Author:  whafa Number:  409605 of 591799

Hmmm. Where to begin? First, the Monty Hall scenario: They have it wrong. You have a one in three chance of being right. You pick a door. One you did not pick is opened, revealing no big prize. The game just changed. It is now a new game, 2 doors, pick one, the odds are 50/50. Change, don't does not change the odds. The only way this is not true is if Monty Hall knows which is the right door and you can game his psychology in which door he shows you. Otherwise, you are in a new game, 2 doors, equal odds.

They do not have it wrong. What you are missing is the information asymmetry between you (the contestant) and Monty. Monty Hall DOES know which door is the right door, and he always opens one without a prize. That tips the odds in your favor to switch. The problem often isn't set up very well and this point is missed.

I fought this one tooth and nail too. Most people do! That's why it's a great thought experiment.
Copyright 1996-2020 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us