The St. Petersburg paradox despite risk-seeking preferences: an experimental study

Business Research

Vjollca Sadiraj¹  James C. Cox¹  Bodo Vogt²  Marcel Lichters²  Eike B. Kroll² 

[1] Andrew Young School of Policy Studies, Georgia State University;Otto-von-Guericke-University Magdeburg, Empirical Economics;

关键词: Decision-making under risk;    St. Petersburg paradox;    Risk-aversion;   

DOI  :  10.1007/s40685-018-0078-y

来源: DOAJ

【 摘 要 】

Abstract The St. Petersburg paradox is one of the oldest challenges of expected value theory. Thus far, explanations of the paradox aim at small probabilities being perceived as zero and the boundedness of utility of the outcome. This paper provides experimental results showing that neither diminishing marginal utility of the outcome nor perception of small probabilities can explain the paradox. We find that even in situations where subjects are risk-seeking, and zeroing-out small probabilities supports risk-taking, the St. Petersburg paradox exists. This indicates that the paradox cannot be resolved by the arguments advanced to date.

【 授权许可】

Unknown