Ergodicity in Economics: a Decision theoretic evaluation

Luciano Andreozzi

No axkfg, SocArXiv from Center for Open Science

Abstract: Peters (2019) presents a new version of the St. Petersburg paradox that allegedly reveals a weakness of orthodox decision theory under uncertainty. I use a variant of Rabin (2000) calibration theorem to show that the new paradox only arises because the author implicitly assumes an unbounded utility function for money. I also assess the author's claim that orthodox decision theory is wrong in insisting on utility functions to be bounded and find it unconvincing.

Date: 2021-05-05
New Economics Papers: this item is included in nep-cwa, nep-hme and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:axkfg

DOI: 10.31219/osf.io/axkfg

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