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… 

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