Harmonic sequence paradox

Pavlo Blavatskyy ()

Economic Theory, 2006, vol. 28, issue 1, 226 pages

Abstract: Informal evidence suggests that individuals are willing to pay only a finite and, typically, very low price for a specific lottery that converges to an infinite payment with probability one. The established decision theories (expected value, expected utility theory, cumulative prospect theory) cannot satisfactorily explain this low willingness to pay. The presented paradox strengthens the original and the super St. Petersburg paradox. Copyright Springer-Verlag Berlin/Heidelberg 2006

Keywords: Expected value; EUT; Cumulative prospect theory; St. Petersburg paradox; Willingness to pay. (search for similar items in EconPapers)
Date: 2006
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DOI: 10.1007/s00199-005-0606-9

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