Here’s an interesting little brain teaser that has applications to trading, economics, politics and business.

Problem Framework:

There is a decision to be made.  For simplicity, assume there are two choices and one choice is correct and one is wrong.  Assume the labeling of the choices is arbitrary and thus neither is a priori more likely to be correct.  Assume the benefit of a correct decision is the same in magnitude and opposite in sign from the cost of an incorrect decision.