Mathematical Conundrum or Not? Number Six 25 pages of reading later...
I'm going to try to come at this from a different angle to try to break the stalemate. I'm in a curious position because I can somewhat see where both sides are coming from.
I think it would help to clarify one thing first: The rule that you could potentially win more than you risk losing holds true regardless of the amount in the envelope - so opening the chosen envelope is irrelevant because a) it doesn't physically change anything and b) you don't learn anything objectively significant that you don't already know.
So we can temporarily take opening the envelope and learning any amounts out of the equation. I include this provision because I think it helps dispel the illusions / the mental trickery / the human intuition, etc. that comes from thinking about fixed amounts of money (I'll elaborate on this later).
So having chosen envelope A, you could say that if envelope B contains twice the amount, you potentially gain more than you'd potentially lose by switching - but importantly, you can also say that if A contains twice the amount as B, you potentially gain more than you'd lose by staying. So logically/mathematically/statistically, there's no advantage to either strategy.
So I think the mistake here was only applying this logic to switching, without realising it applies to staying. Also, I think the promise of 2X a known amount creates the illusion and the desire to chase money that potentially doesn't even exist.
(You may also say that any statistical method that searches for an objectively superior strategy and depends on opening the envelope, must be inherently flawed - because as explained above, it's an insignificant step revealing objectively useless information - so if you're somehow making it significant, you're doing something wrong.)
Now to revisit the idea of knowing the amount in the envelope: I think using amounts like £5/10/20 is misleading because £5 intuitively feels like a throwaway amount that anyone would be happy to lose. Instead, what if your chosen envelope contained a cheque for £10 million? Would you throw away £5m chasing an additional £10m that may not even exist?
And here it gets interesting for me because... given a £10 envelope, I really would switch because a £5 loss is nothing. Given a £10m envelope, I'd stay. So I think there is an argument to be made that, on an individual basis, depending entirely on the circumstances surrounding the person (their financial situation, their priorities and such) and the amount of money on offer, in some cases they may choose to gamble away their known amount chasing a higher amount, accepting that this is a purely subjective decision and that it doesn't increase their chances of maximising their profit, it's not an inherently superior strategy, etc. It's purely, "In this instance, I'd be happy to lose £x in the pursuit of potentially winning £y."
... So I think another flaw here was this assumption/assertion that a gamble with a 2:1 payout and 50% chance of winning is always worth taking. Again, I would not bet £5m on the 50% chance of getting £10m back. You could in fact draw up many scenarios in which the gamble would be stupid (e.g. where the amount you're gambling away would be life-changing or where losing that money would be life-threatening, whereas the higher amount you could potentially win would have diminishing returns (again, I could have some fun with £5m, a lot of fun with £10m, but wouldn't even know what to do with £20m))
In summary:
I disagree that you can make the absolute claim that switching is always the better strategy, in the sense that it's either always in the person's best interests (which is subjective and may be wrong, such as in the personal example I gave) or on the basis that it is somehow statistically/logically/strategically superior (which isn't true at all). But I do agree that an individual in a real world situation may choose to gamble and it may be the "right" choice for them specifically.
(I may yet change my mind on all of this after I've wrapped my head around it a bit more)