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Pastimes : Austrian Economics, a lens on everyday reality

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To: Don Lloyd who started this subject	12/9/2003 9:38:58 PM
From: Don Lloyd	of 445

Please respond with only Private Messages. Economic Puzzle Involving Stock Ownership On the table in front of me sits an unsealed, opaque envelope. The envelope is labelled as follows : *This Envelope and Its Contents are the Entire Assets of the Public Stock Company Known as The Opaque Envelope Company, or OEC.* In my possession I have a stock certificate for 1 (one) share of OEC. In the envelope, there are three pieces of paper which are the same size and are not distinguishable by feel. Two of the pieces are $5 Federal Reserve Notes, and the third is a stock certificate for 1 (one) share of OEC, identical to my own. No other OEC stock certificates exist in any form. Question #1 -- If my brother and I flip a fair, two-sided coin to determine who is entitled to blindly withdraw and keep one of the three pieces of paper from the envelope, what is the probability that the winner will experience a net gain of $5? Question #2 -- What is the probability that the loser will experience a net loss of $5? Question #3 -- What is the probability that the OEC company itself will experience a net loss of $5? Extra Credit -- Repeat the three questions above if the envelope contains five pieces of paper instead of three, with the additional two pieces being two additional 1 (one) share stock certificates for OEC, bringing the total in the envelope to three. Regards, Don

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