Related papers: Relative Net Utility and the Saint Petersburg Para…
The St. Petersburg paradox is the oldest paradox in decision theory and has played a pivotal role in the introduction of increasing concave utility functions embodying risk aversion and decreasing marginal utility of gains. All attempts to…
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…
In this article we will propose a completely new point of view for solving one of the most important paradoxes concerning game theory. The solution develop shifts the focus from the result to the strategy s ability to operate in a cognitive…
Counterfactual utilities evaluate decisions not only by the realized outcome under a given decision, but also by the counterfactual outcomes that would arise under alternative decisions. By generalizing standard utility frameworks, they…
The St. Petersburg Paradox, an important topic in probability theory, has not been solved in the last 280 years. Since Nicolaus Bernoulli proposed the St. Petersburg Paradox in 1738, many people had tried to solve it and had proposed…
The St. Petersburg paradox provides a simple paradigm for systems that show sensitivity to rare events. Here, we demonstrate a physical realization of this paradox using tensile fracture, experimentally verifying for six decades of spatial…
The expected utility hypothesis is a popular concept in economics that is useful for making decisions when the payoff is uncertain. In this paper, we investigate the implications of a fluctuation theorem in the theory of expected utility.…
It has been proposed in medical decision analysis to express the ``first do no harm'' principle as an asymmetric utility function in which the loss from killing a patient would count more than the gain from saving a life. Such a utility…
The St. Petersburg paradox presents a longstanding challenge in decision theory: its classical expected value diverges, yet no correspondingly large finite stake is typically regarded as rational. Traditional responses introduce auxiliary…
Noncooperative games with uncertain payoffs have been classically studied under the expected-utility theory framework, which relies on the strong assumption that agents behave rationally. However, simple experiments on human decision makers…
This paper builds a rule for decisionmaking from the physical behavior of single neurons, the well established neural circuitry of mutual inhibition, and the evolutionary principle of natural selection. No axioms are used in the derivation…
The Allais and Ellsberg paradoxes show that the expected utility hypothesis and Savage's Sure-Thing Principle are violated in real life decisions. The popular explanation in terms of 'ambiguity aversion' is not completely accepted. On the…
Expected utility theory (EUT) is widely used in economic theory. However, its subjective probability formulation, first elaborated by Savage, is linked to Ellsberg-like paradoxes and ambiguity aversion. This has led various scholars to work…
We provide and axiomatize a representation for preferences over lotteries that generalizes the expected utility model. Since the representation uses different utility functions to evaluate different lotteries, the preferences can be…
It is common in inventory theory to consider policies that minimize the expected cost of ordering and holding goods or materials. Nevertheless, the realized cost is a random variable, and, as the Saint Petersburg Paradox reminds us, the…
The 'expected utility hypothesis' and 'Savage's Sure-Thing Principle' are violated in real life decisions, as shown by the 'Allais' and 'Ellsberg paradoxes'. The popular explanation in terms of 'ambiguity aversion' is not completely…
The fracture stress of materials typically depends on the sample size and is traditionally explained in terms of extreme value statistics. A recent work reported results on the carrying capacity of long polyamide and polyester wires and…
The von Neumann and Morgenstern theory postulates that rational choice under uncertainty is equivalent to maximization of expected utility (EU). This view is mathematically appealing and natural because of the affine structure of the space…
The 'expected utility hypothesis' is one of the foundations of classical approaches to economics and decision theory and Savage's 'Sure-Thing Principle' is a fundamental element of it. It has been put forward that real-life situations…
The expected utility hypothesis is one of the building blocks of classical economic theory and founded on Savage's Sure-Thing Principle. It has been put forward, e.g. by situations such as the Allais and Ellsberg paradoxes, that real-life…