Re: S. Petersburg paradox

From: Sunny (sunnyelloco_at_hotmail.com)
Date: 02/17/05 

Date: 17 Feb 2005 06:14:00 -0800

> > Since the Expectation value of the game is infinite, what is the
> > even bet a bettor should be willing to pay in order to play the
> > game?????

Here's something off the top of my head:
The probability of winning 2^n units is (1/2)^n, so on average you
need to play 1/((1/2)^n) = 2^n times to win 2^n units. However to play
that many times, you pay x*2^n units in entrance fees, where x is the
entrance fee for one throw.. So for every amount you win from a draw,
you expect to have lost x*2^n units. So to come out on top, you'd pay
x<1 units to enter.

There's probably some silly mistake there, but I'm sure someone will
point it out soon enough.

-Sunny

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