HPS 0628 Paradox

Back to doc list

Assignment.
Paradoxes of Expectation

1. Consider two St. Petersburg games, each paying on the same schedule. How might we decide that each is an equally good (or bad) choice, that is, that there is not reason to prefer one of over the other.

2. Consider two St. Petersburg games, such that one pays double the amount of the first for the same outcomes. In brief:

Game 1 pays $2 on H, $4 on HT, $8 on HHT, ...
Game 2 pays $4 on H, $8 on HT, $16 on HHT, ...

Both offer the player the same infinite expected value. How can we argue that one game is a better choice for the player than the other?