ABSTRACT
You are presented with two sealed envelopes, A and B, and you know that one of them contains a cheque for twice as much money as the other. You are allowed to select one of them at random. You are then offered the chance to swap and take the other instead. If your selected envelope contains x, and your swap is lucky, you get 2 x, but if you are unlucky you get 0.5x. So your expected utility if you swap is 2x/2 + 0.5x/2, which is 1.25x. So it looks as if you should swap.
