Moral Impossibility in the Petersburg Paradox : A Literature Survey and Experimental Evidence
The Petersburg paradox has led to much thought for three centuries. This paper describes the paradox, discusses its resolutions advanced in the literature while alluding to the historical context, and presents experimental data. In particular, Bernoulli’s search for " the level of moral impossibility in the Petersburg problem is stressed; beyond this level small probabilities are considered too unlikely to be " relevant for judgment and decision making. In the experiment, the level of moral impossibility is elicited through variations of the gamble-length in the Petersburg gamble. Bernoulli’s conjecture that people neglect small probability events is supported by a statistical power analysis. "Keywords: Petersburg paradox; economic history; bounded rationality; significance level; experimental economics" "Classification-JEL: B3;C44; C9; D8; G1; N0"
|Date of creation:||2010|
|Date of revision:|
|Contact details of provider:|| Postal: Bâtiment K2, 4, rue Albert Borschette, L-1246 Luxembourg-Kirchberg|
Phone: +352 46 66 44 6335
Fax: +352 46 66 44 6811
Web page: http://wwwen.uni.lu/luxembourg_school_of_finance
More information through EDIRC
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.:
- Sinn, Hans-Werner, 1980. "Ökonomische Entscheidungen bei Ungewißheit," Monograph, Mohr Siebeck, Tübingen, edition 1, number urn:isbn:9783169427024, January.
- Schmidt, Ulrich & Traub, Stefan, 2009.
"An experimental investigation of the disparity between WTA and WTP for lotteries,"
Open Access Publications from Kiel Institute for the World Economy
28786, Kiel Institute for the World Economy (IfW).
- Ulrich Schmidt & Stefan Traub, 2009. "An Experimental Investigation of the Disparity Between WTA and WTP for Lotteries," Theory and Decision, Springer, vol. 66(3), pages 229-262, March.
- Traub, Stefan & Schmidt, Ulrich, 2006. "An Experimental Investigation of the Disparity between WTA and WTP for Lotteries," Economics Working Papers 2006,09, Christian-Albrechts-University of Kiel, Department of Economics.
- Schmidt, Ulrich & Traub, Stefan, 2002. "An Experimental Test of Loss Aversion," Journal of Risk and Uncertainty, Springer, vol. 25(3), pages 233-49, November.
- Tibor Neugebauer & John Hey & Carmen Pasca, 2010. "Georges-Louis Leclerc de Buffon’s‘Essays on Moral Arithmetic’," LSF Research Working Paper Series 10-06, Luxembourg School of Finance, University of Luxembourg.
- Quiggin, John, 1982. "A theory of anticipated utility," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 323-343, December.
- James C. Cox & Vjollca Sadiraj & Bodo Vogt, 2009.
"On the empirical relevance of st. petersburg lotteries,"
AccessEcon, vol. 29(1), pages 214-220.
- James C. Cox & Vjollca Sadiraj & Bodo Vogt, 2008. "On the Empirical Relevance of St.Petersburg Lotteries," Experimental Economics Center Working Paper Series 2008-05, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University, revised Jan 2009.
- James C. Cox & Vjollca Sadiraj & Bodo Vogt & Utteeyo Dasgupta, 2007. "Is There A Plausible Theory for Risky Decisions?," Experimental Economics Center Working Paper Series 2007-05, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University, revised Apr 2008.
- Eike B. Kroll & Bodo Vogt, 2009. "The St. Petersburg Paradox despite risk-seeking preferences: An experimental study," FEMM Working Papers 09004, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
- Kaivanto, Kim, 2008. "Alternation Bias and the Parameterization of Cumulative Prospect Theory," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 91-107.
- James C. Cox & Vjollca Sadiraj, 2008. "Risky Decisions in the Large and in the Small: Theory and Experiment," Experimental Economics Center Working Paper Series 2008-01, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
When requesting a correction, please mention this item's handle: RePEc:crf:wpaper:10-14. 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: (Martine Zenner)
If references are entirely missing, you can add them using this form.