tag:blogger.com,1999:blog-7366878066073177705.post6627152344568414906..comments2023-06-03T15:00:41.732+01:00Comments on The Psy-Fi Blog: Monty Hall Economicstimarrhttp://www.blogger.com/profile/06254802085744425067noreply@blogger.comBlogger12125tag:blogger.com,1999:blog-7366878066073177705.post-2635419402552985422014-12-30T09:47:15.329+00:002014-12-30T09:47:15.329+00:00A) 1/3 is sticking with your 1 choice out of 3 doo...A) 1/3 is sticking with your 1 choice out of 3 doors<br />B) 1/2 is flipping a coin after the door is opened as this means it's not dependent on the original 1 in 3 choice <br />C) 2/3 is always switching to the 2 doors you didn't choose allowing you to have both. 2 times out of 3, one of these has the car<br /><br />Strategy 3 wins.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7366878066073177705.post-56314922272022512932012-03-07T04:37:50.013+00:002012-03-07T04:37:50.013+00:00In a gameshow setting where the host ALWAYS gives ...In a gameshow setting where the host ALWAYS gives you a chance to switch, the equation works. If you go into the game knowing you are going to be offered a chance to switch after you've made your initial choice, it is obviously the better choice to choose to switch doors. However, in a PRACTICAL real-life setting the probability changes. If you are striking a deal with someone (like say a panhandler on the street). Let's say you pay a pan-handler $10 to play a game where you have a chance to choose between three cups, one of which has $100 under it. However, after you have chosen, the panhandler unexpectedly gives you a *second chance* to switch and reveals that there is nothing under one of the cups. COMMON SENSE dictates that the panhandler has nothing to gain by giving you a 'second chance' if you have actually CHOSEN CORRECTLY. The most likely reason if would offer you a chance to switch is if he KNOWS you chose the right one and is trying to trick you into switching. I think that instinctive common-sense knowlege like this interferes with people's ability to understand the logic behind the principal in a game-show setting where it really is just a matter of probability and you don't have to worry about tricks and such.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7366878066073177705.post-78439955701419453992011-04-30T00:57:08.433+01:002011-04-30T00:57:08.433+01:00Great post!
There is a simulation here: http://se...Great post!<br /><br />There is a simulation here: http://serendip.brynmawr.edu/exchange/threedoors<br /><br />if you don't believe the probabilities. Play a bunch of times using both strategies and see how it comes out!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7366878066073177705.post-40074080370215810732010-09-06T14:01:43.974+01:002010-09-06T14:01:43.974+01:00here is an excel simulation showing both actions a...here is an excel simulation showing both actions and an explanation for the 2 logic choices made for filtering the 2nd choice. http://www.gogerty.com/?p=124nick gogertyhttp://www.gogerty.comnoreply@blogger.comtag:blogger.com,1999:blog-7366878066073177705.post-77135414137569879922010-05-05T10:00:17.594+01:002010-05-05T10:00:17.594+01:00Apparently the Monty Hall test is one that Wall St...Apparently the Monty Hall test is one that Wall Street firms commonly use to see if potential applicants are suitable material for the madness that is a trading desk in the heartlands of financeland. In so using the test these corporations are, knowingly or not, addressing some of the most hard to overcome behavioural biases that often defeat legions of unprepared investors.<br /><br /><br /><a href="http://isaallowance.org.uk" rel="nofollow">ISA Allowance</a>ISA Allowancehttp://isaallowance.org.uknoreply@blogger.comtag:blogger.com,1999:blog-7366878066073177705.post-4493043040674878642010-04-26T19:37:13.780+01:002010-04-26T19:37:13.780+01:00OK, one last try.
So, we opened one of the doors...OK, one last try. <br />So, we opened one of the doors and the two remaining doors have probabilities of one in three and two in three. I switch my choice and open the 2 in 3 chance door. Its empty (or goat). Now the one remaining door has odds of one in three to containg the car. <br />So, i eliminate two doors, knowing the car is behind one in three and am left with a two in three chance of finding nothing (or a goat).<br />It appears that eliminating doors does change the odds!homerhttps://www.blogger.com/profile/13784739252623389976noreply@blogger.comtag:blogger.com,1999:blog-7366878066073177705.post-50139223770153497162010-04-26T18:46:11.857+01:002010-04-26T18:46:11.857+01:00Having read the paper linked, I wonder if i'm ...Having read the paper linked, I wonder if i'm being punked. Did this really get published? No wonder most economits couldn't see the housing bubble. Initially, each door has a one in three chance of winning. If indeed, i was allowed to choose 2 doors, I would have a 2/3 chance of finding the prize. <br />However, assuming you are correct, and a door has a 2/3 chance of having the prize both before and after opening a door, then i was a fool not to choose it in the first place. So, let's say i choose door number one, but without opening one: now doors number 2 and 3 each have a 2/3 probability of having the prize? We now have a 5/3 total probability? <br />Perhaps its a good test because it filters out anyone who can think mathematically (ie. Charlie Munger), clearly a disadvantage to the large firms on Wall Street.homerhttps://www.blogger.com/profile/13784739252623389976noreply@blogger.comtag:blogger.com,1999:blog-7366878066073177705.post-78495786769492136772010-04-26T18:31:12.242+01:002010-04-26T18:31:12.242+01:00this is ludicrous. you had two goats, now one. y...this is ludicrous. you had two goats, now one. you had one car, now one. if there are two rooms, the odds can only be a multiple of 1/2. Changing the number of possibilities does change the odds. Looked at another way, It doesn't matter which door you select as the possible outcomes are the same for each door.homerhttps://www.blogger.com/profile/13784739252623389976noreply@blogger.comtag:blogger.com,1999:blog-7366878066073177705.post-3216176908555408032010-04-22T21:59:01.549+01:002010-04-22T21:59:01.549+01:00Ok...I have two choices. I can keep my door or I c...Ok...I have two choices. I can keep my door or I can switch. If I keep my door my chance of getting the car is 1/3.<br />Therefore if I switch my probabilty has to be 2/3. <br />By Monte Hall choosing a door he gives a lot of info. In 2 out of 3 times he tells you, in effect, where the car is .DIY Investorhttp://rwinvesting.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-7366878066073177705.post-38228712170917125002010-04-21T17:58:25.886+01:002010-04-21T17:58:25.886+01:00@Rob Bennett,
The trouble is that real-world appl...@Rob Bennett,<br /><br />The trouble is that real-world applications of psychology are so specific - it is hard to apply social pressure via a general principle when that principle is not recognized.<br /><br />For instance, I have encountered people who are familiar with the Principle of Restricted Choice (basically the Monty Hall situation applied to a finessing situation in bridge), but who nonetheless put up a stiff fight against switching at Monty Hall.Phil Koopnoreply@blogger.comtag:blogger.com,1999:blog-7366878066073177705.post-91336336181605935162010-04-21T11:46:13.299+01:002010-04-21T11:46:13.299+01:00poorly implemented rationality can be overcome whi...<i>poorly implemented rationality can be overcome while hard-wired behavioural bias probably canâ€™t; and that makes the world of difference.</i><br /><br />This blog entry is so good it's scary. This gets right to the heart of what the investing project is all about (in my view, of course).<br /><br />It may be just that I am a willful optimist, but I am more optimistic than the words quoted above would suggest is appropriate. It's more than poorly implemented irrationality we are dealing with. It really is a hard-wired behavioral bias. But I don't get why so many throw up their hands when they come to that conclusion. It's a good thing to know what we are up against. It tells us what sort of fight it is that we need to be fighting.<br /><br />Say that the Monte Hall problem were discussed in every session of a class on logic. Then on the test the students were asked the solution to it. Would there still be a good number who would believe that the wrong answer was the right answer? Yes. If we are dealing with a hard-wired behavioral bias, people's emotions are going to lead them to that answer, no matter how many times they have been taught that it is wrong. This is why people throw up their hands.<br /><br />But would the students really put that answer down on the paper if they had been told it was wrong in every single class? I don't think so. <b>Social pressure is a psychological reality too.</b> If we taught the right answer over and over and over again, most students would put down the right answer even if they didn't really believe it. This is how people are.<br /><br />The point is -- behavioral biases can be overcome. You can't do it with pure rationality. That's fair to say. Since we are trying to do battle with behavioral biases, we need to look to some behavioral tools to do the job. Forget rationality! Forget lectures! Forget demonstrations! Apply social pressure. That will work. That will cause people to at least put down the right answer and putting it down will over time get them to actually kinda sorta believe it. Sometimes we don't say the things we know, we know the things we say.<br /><br />It works this way in investing too. You can't just tell people what works and expect them to do it. No! You need to drill it and drill it and drill it. It's not logic that teaches, but repetition. If you drill it enough, people will catch on. This is not hopeless. We just need to accept that saying what works is not close to being enough to get the job done. You don't fight emotion with rationality. You fight emotion with emotion.<br /><br />RobRob Bennetthttp://arichlife.passionsaving.comnoreply@blogger.comtag:blogger.com,1999:blog-7366878066073177705.post-83603304248771566682010-04-21T10:59:46.483+01:002010-04-21T10:59:46.483+01:00Wasn't aware of the "...Dummies" thi...Wasn't aware of the "...Dummies" thing. Very simple. This is the first time I've been able to think this through without getting a headache.Anonymousnoreply@blogger.com