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Consider the St. Petersburg Paradox in Example. Suppose that the casino has a total of M =2m dollars, and so it can afford a finite number of coin tosses.

a. How many tosses can the casino afford?
b. Find the expected payoff to the player.
c. How much should a player be willing to pay to play this game?

1 Answer

3 votes

Answer:

(a) The Number of tosses X should be less than or equal to the M dollars.

(b) The expected pay off to the player is "m"

(c) To win the player must play for less than "m" dollars.

Explanation:

Other explanation is given in the attach document.

Consider the St. Petersburg Paradox in Example. Suppose that the casino has a total-example-1
Consider the St. Petersburg Paradox in Example. Suppose that the casino has a total-example-2
Consider the St. Petersburg Paradox in Example. Suppose that the casino has a total-example-3
Consider the St. Petersburg Paradox in Example. Suppose that the casino has a total-example-4
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