In:
Business Research, Springer Science and Business Media LLC, Vol. 12, No. 1 ( 2019-04), p. 27-44
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 zeroing-out small probabilities supports risk-taking, the St. Petersburg paradox exists. This indicates that the paradox cannot be resolved by the arguments advanced to date.
Type of Medium:
Online Resource
ISSN:
2198-3402
,
2198-2627
DOI:
10.1007/s40685-018-0078-y
Language:
English
Publisher:
Springer Science and Business Media LLC
Publication Date:
2019
detail.hit.zdb_id:
2426376-X
SSG:
3,2
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