Abstract
The standard Bayesian account of rational decision-making leads to the St. Petersburg paradox. Jeffrey’s response to the paradox suggests a modification of the St. Petersburg game. The puzzle is that it seems reasonable to refuse to play the game, contrary to Bayesian analysis, yet the game is immune to Jeffrey’s original objections. A partially systematic account of the rationality of refusal can be based on the observation that in making decisions there is an implicit level of likelihood below which possible events are discounted, and properly so. A thorough account of rational decision-making should incorporate some standard of how the refusal to consider extremely unlikely contributions to expected utility can be warranted.
I am greatly indebted to Jon Dorling, Ray Nelson Ilmar Waldner, and, especially, to Richard Jeffrey, for comments on earlier drafts of this discussion. None of its faults should be taken as theirs, however, nor should it be assumed that they are in essential agreement throughout.
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Gorovitz, S. (1979). The St. Petersburg Puzzle. In: Allais, M., Hagen, O. (eds) Expected Utility Hypotheses and the Allais Paradox. Theory and Decision Library, vol 21. Springer, Dordrecht. https://doi.org/10.1007/978-94-015-7629-1_12
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DOI: https://doi.org/10.1007/978-94-015-7629-1_12
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