Wikipedia gives multiple explanations of Curry's paradox, one of which is expressed via lambda calculus.
However, the explanation doesn't look like any lambda calculus I've ever seen, and there's an existing discussion-page section that would appear to indicate I'm not alone.
The proof is given as follows:
Consider a function $r$ defined as
$$r = ( λx. ((x x) → y) )$$
Then $(r r)$ $\beta$-reduces to
$$(r r) → y$$
If $(r r)$ is true then its reduct $(r r) → y$ is also true, and, by modus ponens, so is $y$. If $(r r)$ is false then $(r r) → y$ is true by the principle of explosion, which is a contradiction. So $y$ is true and as $y$ can be any statement, any statement may be proved true.
$(r r)$ is a non-terminating computation. Considered as logic, $(r r)$ is an expression for a value that does not exist.
The last sentence appears to be irrelevant (or perhaps it's intended as a corollary), so I'll ignore it.
The primary question on the talk page is what $→$ means in a lambda expression. I hypothesized that it might be supposed to indicate that $(x → y)$ is an expression that evaluates to $y$ if $x$ is "true" for some meaning of "truth" in lambda calculus (perhaps if $x$ is a Church-numeral greater than 0) and to something else otherwise. But in there's no "else" expression specified, so that doesn't seem right, unless $\beta$-reduction on $(x → y)$ is non-terminating for $x=\bar 0$.
The proof then claims that if $(r r)$ is false (again, it's not clear what "true" or "false" means in this context), then the principle of explosion may be invoked, but it's not clear why $(r r)$ being false would imply a contradiction, so I don't know why the principle of explosion can be invoked here.
Is this demonstration of the paradox correct but simply poorly explained, or is it incorrect?
Long Comment
Here is an outline of Curry's original version of the paradox, using combinatory logic [hoping that someone smarter than me can derive the correct "$\lambda$-version"].
See Haskell Curry & Robert Feys & William Craig, Combinatory Logic. Volume I (1958), Ch.8A. THE RUSSELL PARADOX, page 258-59 or Katalin Bimbò, Combinatory Logic : Pure Applied and Typed (2012), Ch.8.1 Illative combinatory logic, page 221-on.
The system is called illative combinatory logic, that extends pure combinatory logic with the inclusion of new constants that, of course, expands the set of CL-terms.
The new symbol [Bimbò, page 221-22]:
The "implication" is characterized by the following theorems [Bimbò, page 223]:
In addition, we need [Bimbò, page 12 and page 47]
Now for the proof of Curry’s original paradox [Bimbò, page 224]:
Curry's original exposition [Curry, Feys & Craig, page 4] starts from :
Following this analysis, Curry "manufactured" the paradoxical combinator $\mathsf Y$ [CFC, page 177] :
The definition (3) can be generalized to :
We have seen that axioms (A1)-(A3) and the two rules define the implicational fragment of classical logic. We have seen also that if $Neg$ stands for negation, then $\mathsf YNeg$ is equal to its own negative.
Note. Here is a list of combinators, given by their axioms [Bimbò, page 6]:
The other basic definitions are that of one-step reduction and of weak reduction (denoted by $\rhd_w$), i.e. the reflexive transitive closure of the one-step reduction relation.