TL;DR
This paper revisits Menger's 1934 analysis of the St. Petersburg paradox, identifying errors that challenge his conclusion about the limitations of unbounded utility functions like Bernoulli's logarithmic utility.
Contribution
It corrects mathematical errors in Menger's original work, clarifying the validity of unbounded utility functions in resolving the paradox.
Findings
Menger's original conclusions are invalid due to mathematical errors.
Unbounded utility functions can still resolve the St. Petersburg paradox.
The paper clarifies the proper mathematical treatment of the paradox.
Abstract
Karl Menger's 1934 paper on the St. Petersburg paradox contains mathematical errors that invalidate his conclusion that unbounded utility functions, specifically Bernoulli's logarithmic utility, fail to resolve modified versions of the St. Petersburg paradox.
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Taxonomy
TopicsEconomic Theory and Institutions · Economic theories and models · Economic Theory and Policy