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Wes_W comments on Doubt, Science, and Magical Creatures - a Child's Perspective - Less Wrong
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In my family, there is a story about my great-aunt when she was a child, involving a game where she was allowed to choose between a nickel and a dime. She took the nickel instead of the dime, and all the grown-ups got a chuckle at her cute naivete. This continued long past the age when she should have known the smaller dime was nevertheless more valuable, and eventually her mother realized she was well aware that, if she took the dime even once, people would stop inviting her to play that game.
It's not a tooth-fairy story specifically, but yes, there certainly are children that clever.
I've heard that story as a joke. This is the first time I've heard it attached to a particular person.
And that would be a bad thing why? Did she enjoy being chuckled at?
Probably not, but she did enjoy extra spending money. Remember that this story (ostensibly, although see NancyLebovitz's comment) takes place long enough ago that a nickel could actually buy something.
If I were to assign a moral to the story, it would be something like "don't assume children aren't extremely clever". The girl not only understood the game on the object level, but also grasped the metagame and turned it to her advantage.
(The meta-moral for myself would be "remember that some of your relatives are senile enough to misremember jokes as autobiographical".)
I think the point is that she enjoyed getting free money more than she disliked being chuckled at, so she was willing to suffer being chuckled at in order to receive the free money.
People often do like making their relatives happy. If her family was laughing and having a good time it doesn't seem that strange for her to just play along.
I also wouldn't be shocked either if her family knew to some extent that she was playing along and that it was something of a family "in joke". (not the explicit kind of in joke, just an organic kind)