The St. Petersburg Paradox at 300
Nicolas Bernoulli’s discovery in 1713 that games of hazard may have infinite expected value, later called the St. Petersburg Paradox, initiated the development of expected utility in the following three centuries. An account of the origin and the solution concepts proposed for the St. Petersburg Paradox is provided. D’Alembert’s ratio test is used for a uniform treatment of the manifestations of the St. Petersburg Paradox and its solution proposals. It is also shown that a St. Petersburg Paradox can be solved or regained by appropriate transformations of the winnings or their utilities on the one hand or the probabilities on the other. This last feature is novel for the analysis of the St. Petersburg Paradox. Copyright Springer Science+Business Media New York 2013
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kahneman, Daniel & Tversky, Amos, 1979.
"Prospect Theory: An Analysis of Decision under Risk,"
Econometric Society, vol. 47(2), pages 263-91, March.
- Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
- Shapley, Lloyd S., 1977. "The St. Petersburg paradox: A con games?," Journal of Economic Theory, Elsevier, vol. 14(2), pages 439-442, April.
- Tversky, Amos & Kahneman, Daniel, 1992. " Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
- Brito, D. L., 1975. "Becker's theory of the allocation of time and the St. Petersburg Paradox," Journal of Economic Theory, Elsevier, vol. 10(1), pages 123-126, February.
- Aumann, Robert J., 1977. "The St. Petersburg paradox: A discussion of some recent comments," Journal of Economic Theory, Elsevier, vol. 14(2), pages 443-445, April.
- Tibor Neugebauer, 2010. "Moral Impossibility in the Petersburg Paradox : A Literature Survey and Experimental Evidence," LSF Research Working Paper Series 10-14, Luxembourg School of Finance, University of Luxembourg.
- George J. Stigler, 1950.
"The Development of Utility Theory. II,"
Journal of Political Economy,
University of Chicago Press, vol. 58, pages 373.
- Bentham, Jeremy, 1781. "An Introduction to the Principles of Morals and Legislation," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number bentham1781.
- Pavlo R. Blavatskyy, 2005. "Back to the St. Petersburg Paradox?," Management Science, INFORMS, vol. 51(4), pages 677-678, April.
- Yaari, Menahem E, 1987. "The Dual Theory of Choice under Risk," Econometrica, Econometric Society, vol. 55(1), pages 95-115, January.
- Arrow, Kenneth J, 1974. "The Use of Unbounded Utility Functions in Expected-Utility Maximization: Response," The Quarterly Journal of Economics, MIT Press, vol. 88(1), pages 136-38, February.
- Shapley, Lloyd S., 1977. "Lotteries and menus: A comment on unbounded utilities," Journal of Economic Theory, Elsevier, vol. 14(2), pages 446-453, April.
- Samuelson, Paul A, 1977. "St. Petersburg Paradoxes: Defanged, Dissected, and Historically Described," Journal of Economic Literature, American Economic Association, vol. 15(1), pages 24-55, March.
- Morgenstern, Oskar, 1976. "The Collaboration between Oskar Morgenstern and John von Neumann on the Theory of Games," Journal of Economic Literature, American Economic Association, vol. 14(3), pages 805-16, September.
When requesting a correction, please mention this item's handle: RePEc:kap:jrisku:v:46:y:2013:i:3:p:247-264. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Christopher F. Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.