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The St. Petersburg Paradox (Stanford Encyclopedia of Philosophy)

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The St. Petersburg paradox was introduced by Nicolaus Bernoulli in 1713. It continues to be a reliable source for new puzzles and insights in decision theory. The standard version of the St. Petersburg paradox is derived from the St. Petersburg game, which is played as follows: A fair coin is flipped until it comes up heads the first time. At that point the player wins $ 2 n , $ 2 𝑛 , where n is the number of times the coin was flipped. How much should one be willing to pay for playing this game? Decision theorists advise us to apply the principle of maximizing expected value. According to this principle, the value of an uncertain prospect is the sum total obtained by multiplying the value of each possible outcome with its probability and then adding up all the terms (see the entry on normative theories of rational choice: expected utility). In the St. Petersburg game the monetary values of the outcomes and their probabilities are easy to determine. If the coin lands heads on the fi

--> The St. Petersburg Paradox (Stanford Encyclopedia of Philosophy) Stanford Encyclopedia of Philosophy Menu Browse Table of Contents What's New Random Entry Chronological Archives About Editorial Information About the SEP Editorial Board How to Cite the SEP Special Characters Advanced Tools Contact Support SEP Support the SEP PDFs for SEP Friends Make a Donation SEPIA for Libraries Entry Navigation Entry Contents Bibliography Academic Tools Friends PDF Preview Author and Citation Info Back to Top The St. Petersburg Paradox First published Tue Jul 30, 2019; substantive revision Tue Aug 1, 202

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