The time resolution of the St. Petersburg paradox

Ole Peters

Papers from arXiv.org

Abstract: A resolution of the St. Petersburg paradox is presented. In contrast to the standard resolution, utility is not required. Instead, the time-average performance of the lottery is computed. The final result can be phrased mathematically identically to Daniel Bernoulli's resolution, which uses logarithmic utility, but is derived using a conceptually different argument. The advantage of the time resolution is the elimination of arbitrary utility functions.

Date: 2010-11, Revised 2011-03
New Economics Papers: this item is included in nep-upt
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Citations: View citations in EconPapers (12)

Published in Phil. Trans. R. Soc. A, vol. 369 no. 1956 4913--4931

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