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Old 09-09-2006, 09:11 AM
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Jacklad Jacklad is offline
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Default Re: Stupid things people thought about Finance

Quote:
Originally Posted by wannabefree
Hey Matthew you might want to check out this website http://en.wikipedia.org/wiki/Monty_Hall_problem

This is actually a pretty famous math problem it's called the Monty Hall paradox. It was originally posed by marilyn vos savant (aka the smartest person in the world) in a column and she had many famous mathematicians who wrote her and told her how stupid she is. She made them seem foolish.
People get this one wrong because they think in terms of probability, assuming a random distribution. But that doesn't apply to this problem because it doesn't deal with "pure" random probability. The secret to the trick is that Monty always knows where the "prize" is and will never reveal it. It is his influence on the problem that causes the scenario where it is better to switch.

Take Monty out of the problem and it works the way people think it should.

Jackie
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