Mathematics Research Institute

No se ha especificado ningún tipo
No se ha especificado ningún tipo

Moral Impossibility in the Petersburg Paradox: A Literature Survey and Experimental Evidence

Tibor Neugebauer (University of Luxembourg)

Fecha: 10/01/2013 12:00
Lugar: Aula C4, Facultad de Ciencias Económicas y Emresariales
Grupo: GIR: Optimización Dinámica, Finanzas Matemáticas y Utilidad recursiva

The Petersburg paradox has led to much thought for three centuries. This paper describes the paradox, discusses its resolutions advanced in the literature while alluding to the historical context, and presents experimental data. In particular, Bernoulli’s search for the level of moral impossibility in the Petersburg problem is stressed; beyond this level small probabilities are considered too unlikely to be relevant for judgment and decision making. In the experiment, the level of moral impossibility is elicited through variations of the gamble-length in the Petersburg gamble. Bernoulli’s conjecture that people neglect small probability events is supported by a statistical power analysis.