On the Empirical Relevance of St. Petersburg Lotteries

8 Pages Posted: 16 Jan 2011

See all articles by James C. Cox

James C. Cox

Georgia State University - Department of Economics

Vjollca Sadiraj

Georgia State University - Department of Economics

Bodo Vogt

Bielefeld University - Center for Mathematical Economics

Date Written: January 1, 2011

Abstract

Expected value theory has been known for centuries to be subject to critique by St. Petersburg paradox arguments. And there is a traditional rebuttal of the critique that denies the empirical relevance of the paradox because of its apparent dependence on existence of credible offers to pay unbounded sums of money. Neither critique nor rebuttal focus on the question with empirical relevance: Do people make choices in finite St. Petersburg games that are consistent with expected value theory? This paper reports an experiment that addresses that question.

Keywords: St. Petersburg, paradox, expected value theory, experiment

Suggested Citation

Cox, James C. and Sadiraj, Vjollca and Vogt, Bodo, On the Empirical Relevance of St. Petersburg Lotteries (January 1, 2011). Andrew Young School of Policy Studies Research Paper Series No. 11-04, Available at SSRN: https://ssrn.com/abstract=1740724 or http://dx.doi.org/10.2139/ssrn.1740724

James C. Cox (Contact Author)

Georgia State University - Department of Economics ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States
404-651-8888 (Phone)
404-651-0425 (Fax)

Vjollca Sadiraj

Georgia State University - Department of Economics ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States

Bodo Vogt

Bielefeld University - Center for Mathematical Economics ( email )

Postfach 10 01 31
Bielefeld, D-33501
Germany

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