Considering the Pasadena "Paradox"

Vivian, Robert William (2006): Considering the Pasadena "Paradox". Published in: South African Journal of Economic & Management Sciences , Vol. 2, No. NS9 (June 2006): pp. 277-284.

Abstract

Nover and Hájek (2004) suggested a variant of the St Petersburg game which they dubbed the Pasadena game. They hold that their game ‘is more paradoxical than the St Petersburg game in several aspects’. The purpose of this article is to demonstrate theoretically and to validate by simulation, that their game does not lead to a paradox at all, let alone in the St Petersburg game sense. Their game does not produce inconsistencies in decision theory.

• Item Type: MPRA Paper
• Institution: University of the Witwatersrand
• Language: English
• Keywords: expected values; St Petersburg paradox; decision rules; simulation; harmonic series
• Subjects: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C70 - General

References

Bernoulli, D (1738/1954) ‘Exposition of a new theory on the measurement of risk’ Econometrica 22 (1): 23-36. Menger, Karl (1954) in Bernoulli (1738/1954) ‘Exposition of a new theory on the measurement of risk’ Econometrica 22 (1) 23-36. Nover, Harris and Alan Hájek (2004) ‘Vexing Expectations’ Mind 113: 237-249. Todhunter, I (1865/1949) A history of the Mathematical Theory of Probability – from the time of Pascal to that of Laplace New York; Chelsea Publishing Company, Reprint Vivian, RW (2003) ‘Solving the St Petersburg Paradox-the paradox which is not and never was’ South African Journal of Economic and Management Sciences NS 6 (2) 331-345. Vivian, RW (2004) ‘Simulating Daniel Bernoulli’s St Petersburg game: Theoretical and empirical consistency’ Simulation & Gaming 35(4) 499-504.