St. Petersburg Paradox

is a thought experiment of double or nothing which one should arguably play at any price if offered the opportunity but which few actually would.

Assuming the game can continue as long as the coin toss results in heads and in particular that the casino has unlimited resources, this sum grows without bound and so the expected win for repeated play is an infinite amount of money. Considering nothing but the expected value of the net change in one's monetary wealth, one should therefore play the game at any price if offered the opportunity. Yet, in published descriptions of the game, many people expressed disbelief in the result. Martin quotes Ian Hacking as saying 'few of us would pay even $25 to enter such a game' and says most commentators would agree.[3] The paradox is the discrepancy between what people seem willing to pay to enter the game and the infinite expected value.' (wikipedia)

st. petersburg paradox, n.Definitions

st. petersburg paradox