Is there a fair price in St. Petersburg repeated games? An empirical analysis

Ruggero Paladini

No 44, Public Finance Research Papers from Istituto di Economia e Finanza, DSGE, Sapienza University of Rome

Abstract: Can the Foley value (n+2.53) be considered a fair price? It is possible to give a positive answer, even if one has to depart to some extent from the classic St. Petersburg game. The only way to put player and dealer in an equal position is to compare the median of an MC simulation of N games with the Foley value. The difference should be, apart from exceptional cases, of the order of one monetary unit or less. Of course this difference has to be multiplied by N in favour of the winning side, so that higher N implies greater win and risk. The departure from the original game of St. Petersburg therefore takes place in two steps: the first step consists in playing not a single game but several ones; the second in repeating the same number of games with the MC technique and checking the median value with respect to the Foley value. In this way the odds of player and dealer would be balanced; the value of the unit stake would depend on their love for risk.

Keywords: Business taxation; State aid control; Multinational enterprises (search for similar items in EconPapers)
JEL-codes: H K (search for similar items in EconPapers)
Pages: 21 pages
Date: 2020-11
New Economics Papers: this item is included in nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.dsge.uniroma1.it/sites/default/files/p ... conomia/e-pfrp44.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gfe:pfrp00:0044

Access Statistics for this paper

More papers in Public Finance Research Papers from Istituto di Economia e Finanza, DSGE, Sapienza University of Rome Contact information at EDIRC.
Bibliographic data for series maintained by Valeria De Bonis ().