St. Petersburg paradox

In probability theory and decision theory the St. Petersburg paradox is a paradox that exhibits a random variable whose value is probably very small, and yet has an infinite expected value. This poses a situation where decision theory may superficially appear to recommend a course of action that no rational person would be willing to take. That appearance evaporates when utilities are taken into account.

Related Topics:
Probability theory - Decision theory - Paradox - Random variable - Expected value - Rational - Utilities

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The paradox is named from Daniel Bernoulli's original solution, published in 1738 in the Commentaries of the Imperial Academy of Science of Saint Petersburg.

Related Topics:
Daniel Bernoulli - 1738 - Saint Petersburg

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