St. Petersburg Paradox - StatPlay

Infinite Expected Value vs Reality. Explore Expected Utility Theory.

St. Petersburg Paradox. Infinite Expected Value vs Reality. The expected payout of this game is mathematically infinite (because the prize doubles forever). However, the chance of winning a huge prize is vanishingly small. Most people won't pay more than a few dollars to play, showing that 'Expected Utility' (value to you) is different from 'Expected Value' (mathematical average).