Document Type
Article
Publication Date
2-1-2018
Abstract
The St. Petersburg Paradox is one of the oldest challenges of expected value theory. Thus far, explanations of the paradox aim at small probabilities being perceived as zero and the boundedness of utility of the outcome. This paper provides experimental results showing that neither diminishing marginal utility of the outcome nor perception of small probabilities can explain the paradox. We find that even in situations where subjects are risk-seeking, and zeroingout small probabilities supports risk-taking, the St. Petersburg Paradox exists. This indicates that the paradox cannot be resolved by the arguments advanced to date.
Recommended Citation
Cox, James; Kroll, Eike; Lichters, Marcel; Sadiraj, Vjollca; and Vogt, Bodo, "The St. Petersburg Paradox Despite Risk-seeking
Preferences: An Experimental Study" (2018). ExCEN Working Papers. 6.
https://scholarworks.gsu.edu/excen_workingpapers/6
Comments
To learn more about the Andrew Young School of Policy Studies and ExCEN Working Papers Series, visit https://aysps.gsu.edu/ and http://excen.gsu.edu/center/.