> at the end of the day it's the same two sandwiches
No, it isn't, because the sandwiches are in the possession of different people than when they started. That's where the wealth gets created: the value of each sandwich is different for different people. Many people fail to understand the concept of wealth creation because they think of "value" as something inherent to the object, instead of something that depends on who is using the object and for what purpose.
> I suggest without underlying thoughts that we exchange the sandwich back after taking a closer look at it.
You can suggest that, but why should I agree if I value the sandwich I now have more than the sandwich you have--which of course I do because that's why I agreed to the first exchange?
> Say you do for sake of argument. It has shellfish on it and you are allergic. Can we reverse the exchange and create more value?
More value relative to the state where I now realize I have a sandwich I can't eat, yes. But that's just because I was unaware, when I made the first exchange, that the sandwich I was getting was one I would be unable to eat. If I had known that before, I would have refused the first exchange.
More value relative to the original state, before the first exchange, no, since if we re-exchange the sandwiches back, we're just returning to the original state.
A simpler way of describing this case is that people can sometimes have mistaken beliefs, which causes the perceived value to them of something to be different from its actual value to them. The actual value is what matters for wealth creation. In the case where the sandwich turns out to be inedible, the first exchange actually did not create wealth; I just thought it did. Then I realized it didn't, so I was willing to undo it. In fact, given the actual facts, the first exchange destroyed some wealth, which undoing the exchange restored.
> We could also take a bite before exchanging again.
How would that make either of us want to exchange the sandwiches back again?
> (I'm not trying to prove a point, just curious how the logic extends)
I think you're missing a key aspect of the logic, which is that people make exchanges, not to satisfy someone's abstract, highly contrived thought experiment, but because they want to. So asking about exchanges that nobody would want to make is pointless.
(At least, that's how it works in a free market, where all transactions are voluntary. If people are forced to make exchanges they would not choose to make, you can no longer count on those exchanges creating wealth even if everyone's beliefs are accurate.)
No, it isn't, because the sandwiches are in the possession of different people than when they started. That's where the wealth gets created: the value of each sandwich is different for different people. Many people fail to understand the concept of wealth creation because they think of "value" as something inherent to the object, instead of something that depends on who is using the object and for what purpose.