Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/233145
Authors: 
Cox, James C.
Kroll, Eike B.
Lichters, Marcel
Sadiraj, Vjollca
Vogt, Bodo
Year of Publication: 
2019
Citation: 
[Journal:] Business Research [ISSN:] 2198-2627 [Volume:] 12 [Year:] 2019 [Issue:] 1 [Pages:] 27-44
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.
Subjects: 
Decision-making under risk
St. Petersburg paradox
Risk-aversion
JEL: 
C91
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by/4.0/
Document Type: 
Article

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