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

@article{Cox2018TheSP, title={The St. Petersburg paradox despite risk-seeking preferences: an experimental study}, author={James C. Cox and Eike B. Kroll and Marcel Lichters and Vjollca Sadiraj and Bodo Vogt}, journal={Business Research}, year={2018}, volume={12}, pages={27-44} }

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…

## 11 Citations

A Resource-Rational Process-Level Account of the St. Petersburg Paradox

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This work shows that Nobandegani et al.'s (2018) metacognitively rational model, sample-based expected utility (SbEU), can account for major experimental findings on this paradox and presents the first resource-rational, process-level explanation of this paradox.

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This doctoral thesis contains three theoretical essays on the predictive power of leading descriptive decision theories and one empirical essay on the impact of stock market investors’ probability…

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- Computer ScienceAAAI
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SbEU provides a unified, algorithmic explanation of major experimental findings on this paradox and discusses the implications of the work for algorithmically understanding human cognition and for developing human-like artificial intelligence.

The Need for Discontinuous Probability Weighting Functions: How Cumulative Prospect Theory is Torn Between the Allais Paradox and the St. Petersburg Paradox

- SSRN Electronic Journal
- 2019

Cumulative Prospect Theory (CPT) must embrace probability weighting functions with a discontinuity at probability zero to pass the two most prominent litmus tests for descriptive decision theories…

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This article provides a dataset from an experiment with n = 107 consumers that measured the WTP for a set of eight real consumer goods by means of the Becker-DeGroot-Marschak (BDM) mechanism, entailing a facultative resell option, for testing the empirical incentive-compatibility of the BDM mechanism.

Relative Net Utility and the Saint Petersburg Paradox

- Economics, Computer ScienceArXiv
- 2019

This paper explored how artificial intelligent (AI) agent will make choices and observed that if AI agent uses the nominal utility approach it will see infinite reward while if it uses the net utility approach It will see the limited reward that human beings see.

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