He does kind of improve on it. You do have information about whether the host knows which door the car is behind. If the host does not know which door the car is behind he just did something very unlikely so you should update your model based on this information. Assuming you have reasonable priors about the distribution of whether the host has information about the car then after he did what he did it is very likely he has information about where the car is.
Though actually I don't think you can then use this information to answer the question because it is tainted with the assumption that the car is not behind your door. :(
The host knows which door the car is behind. Therefore if he makes decisions based on that knowledge those decisions can give you information about the location of the car. If there is some action that he is more likely to perform when the car is behind door 1 than when it isn't, and he performs that action, then you should increase the probability you assign to the car being behind door 1.
In particular if you've chosen door 2 then the host is more likely to reveal door 3 if the car is behind door 1 than if it isn't.
I don't think your interpretation of the sentence is sensible. The sentence mentions that the host knows what's behind the doors. So, if he is allowed to open the door with the car, the problem would become insoluble and would just be about speculating on the host's personality. And it definitely doesn't support the conclusion that the probabilities become 50/50.
Does it matter whether or not the host knows? I don't see how it changes the odds in any way, unless of course he opens the door with the car (very likely with 1 million doors).
In your reverse problem, I don't see how the new door can ever be relevant, as you know the car is behind 1 or 2, so you're only ever interested in picking between those 2.
In the original problem, its presence _is_ relevant, as the car could be behind doors 1, 2, or 3. Say you pick door 1 - there's a 1/3 chance you are right.
The host is then left with doors 2 and 3. We know there is a 2/3 chance the car is behind _one_ of these doors. When the presenter reveals a goat (say in door 2), he is reveling information about this set of doors - there is still a 2/3 chance that the car is behind one of the doors in this set, but there's only one door left we don't know anything about (3). There is therefore a 2/3 chance that it is behind _this_ door.
It does change your odds -- you're now living in a world in which the car didn't get revealed, and by Bayesian reasoning that means it's more likely that you live in a world where you picked the correct door.
The way I see the problem is slightly different and I think quite intuitive. If you've chosen a goat, then the host, by eliminating a door, is telling you exactly where the car is. If you have not chosen a goat, then the host not telling you where the car is. What are the chances that the host is telling you the location of the car? It's the same as the chances of you having chosen a goat the first time around.
Try thinking of it this way: The information is in which door the host does not open.
2/3rds of the time, your initial choice will be a goat. In those cases the host deliberately avoids opening the remaining door with a car - thereby telling you where it is.
If you chose the car door initially, then indeed you get no new information. But that only happens 1/3rd of the time.
I finally got it! It's because whether the host has opened a door or not doesn't matter.
You know from the start that one out of three doors has a car behind it, and his opening one of the remaining doors doesn't change it. He just shows you what you already know.
When you select your door, you know there is a 1/3 chance that your door has a car behind it, and a 2/3 chance that it doesn't. The host opens another door, and there is still a 2/3 chance your door has no car. It has only been proven that the door the host opened has no car behind it.
EDIT: To clarify, I'll rephrase. When you select your door, you know it has a 1 in 3 chance of hiding the car, and importantly, you know that there is a 2 in 3 chance that the car is not behind your door.
When the host opens his door, you still know there is a 2 in 3 chance that your door doesn't have a car behind it, but are now guaranteed that, if you chose the wrong door in the first place, you will now choose the right door.
It's not that the host's door is eliminated from the possibilities, it's that you can either open your door or effectively open all the rest of the doors to find the car. Which would you choose?
With the host as another blind player, his opening of 98 goat doors only increases the probability you were right from 0.01 to 0.5, so still makes no difference for you to change. But of course the original version of the problem is predicated on the host knowing where the car is and only revealing goats.
The problem is in the phrasing, and you're actually not improving on it. The way you explain the problem, it would still be 50/50. What changes the situation is that the show host CANNOT open the door with the car in it. The way you phrase it, it's not clear that the show host has any information that the participant doesn't have, but he does.
For the problem as stated here ("I'll open one of the other doors to reveal a goat") you should switch doors.
For the version of the problem where the host doesn't know where the car is ("I'll open one of the other doors, but I don't know what it will reveal"), it makes no difference.
For the version of the problem where the host knows where the car is and only opens another door if the car is behind the door you picked, you should obviously never change doors.
Usually when this problem is asked, the questioner (who usually doesn't understand the problem himself) doesn't specify which version of the problem he's asking about -- all of the cases I know where a famous smart guy has answered "incorrectly" come down to the problem not being described to them in precise terms and them not making the same assumptions about the host's behaviour as the questioner.
That's not right, and it's one of the more confusing parts of the problem in my opinion.
I can make sense of it by drawing out the probability trees and see that it's 1/2 rather than 2/3 in this case, but it actually sticks with me if I think more like so:
My prior is that there's a 1/3 chance I picked the car; that's the world where the host can't reveal anything other than a goat.
In the scenario where the host then reveals a goat intentionally, my prior doesn't change. The host can always reveal a goat. This gives me no information. Therefore, it's still 1/3 that I picked the car, so the remaining door must be 2/3, so I switch and get a 2/3 chance.
But in the scenario where the host reveals a door at random, and it happens to be a goat, it's time to update my priors. Since he didn't accidentally reveal the prize, the probability that I'm in the world where he couldn't accidentally reveal the prize is increased relative to the probability that I'm in the world where he could have.
The thing that is often de-emphasised in the presentation of the problem, in order to make it seem more mysteriously paradoxical, is that the presenter knows where the car is and this knowledge is always used perfectly. If the question always ended with "remember: Monty knows where the car is and will use this information", it would be more obvious.
Imagine a universe with many simultaneous Monty Hall clones playing at once in many studios, where Monty doesn't know and opens another door at random. If that door has the car behind it, Monty and contestant are both shot in the head and the studio burned down and erased from all records. This bloody culling of branches of the probabilities is the same as effected by giving Monty the knowledge and telling him to act on it.
That’s indeed what happens when the host picks at random (the hypothesis in this subthread). He has a 1/3 chance of showing the car. If he doesn’t, the car is behind any of the other doors with probability 1/2.
Though actually I don't think you can then use this information to answer the question because it is tainted with the assumption that the car is not behind your door. :(
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