The time resolution of the St Petersburg paradox |
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Authors: | Peters Ole |
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Affiliation: | Department of Mathematics and Grantham Institute for Climate Change, Imperial College London, London SW7 2AZ, UK. ole@santafe.edu |
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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. |
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