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arXiv · 1011.4404

The time resolution of the St. Petersburg paradox

Ole Peters
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Abstract

A resolution of the St. Petersburg paradox is presented. In contrast to the standard resolution, utility is not required. Instead, the time-average performance of the lottery is computed. The final result can be phrased mathematically identically to Daniel Bernoulli's resolution, which uses logarithmic utility, but is derived using a conceptually different argument. The advantage of the time resolution is the elimination of arbitrary utility functions.

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Ole Peters. 2011-03-23. The time resolution of the St. Petersburg paradox. https://doi.org/10.1098/rsta.2011.0065

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