Related papers: A New Pricing Theory That Solves the St. Petersbur…

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 sentence from Carl Boyer's A History of Mathematics can be interpreted so that the full brothers Nicolaus II (02/06/1695 - 07/31/1726) and Daniel Bernoulli (02/08/1700 - 03/17/1782) are the authors of the St. Petersburg paradox. The…

The famous Saint Petersburg Paradox (St. Petersburg Paradox) shows that the theory of expected value does not capture the real-world economics of decision-making problems. Over the years, many economic theories were developed to resolve the…

This paper proposes a theory of pricing premised upon the assumptions that customers dislike unfair prices---those marked up steeply over cost---and that firms take these concerns into account when setting prices. Since they do not observe…

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…

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 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…

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…

We use three kinds of computations: simulation, numeric, and symbolic, to guide risk-averse gamblers in general, and offer particular advice on how to resolve the famous St. Petersburg paradox.

We study the discrete Bertrand pricing game with a non-increasing demand function. The game has $n \ge 2$ players who simultaneously choose prices from the set $\{1/k, 2/k, \ldots, 1\}$, where $k\in\mathbb{N}$. The player who sets the…

The paper studies pricing of insurance products focusing on the pricing of annuities under uncertainty. This pricing problem is crucial for financial decision making and was studied intensively, however, many open questions still remain. In…

If you recommend a product to me and I buy it, how much should you be paid by the seller? And if your sole interest is to maximize the amount paid to you by the seller for a sequence of recommendations, how should you recommend optimally if…

We study the problem of online dynamic pricing with two types of fairness constraints: a "procedural fairness" which requires the proposed prices to be equal in expectation among different groups, and a "substantive fairness" which requires…

Simultaneous ascending auctions present agents with the exposure problem: bidding to acquire a bundle risks the possibility of obtaining an undesired subset of the goods. Auction theory provides little guidance for dealing with this…

There has been a flurry of research in recent years on notions of fairness in ranking and recommender systems, particularly on how to evaluate if a recommender allocates exposure equally across groups of relevant items (also known as…

A pricing principle is introduced for non-attainable $q$-exponential bounded contingent claims in an incomplete Brownian motion market setting. The buyer evaluates the contingent claim under the ``distorted Radon-Nikodym derivative'' and…

We propose a probabilistic framework for pricing derivatives, which acknowledges that information and beliefs are subjective. Market prices can be translated into implied probabilities. In particular, futures imply returns for these implied…

The relevance of Adam Smith for understanding human morality and sociality is recognized in the growing interest in his work on moral sentiments among scholars of various academic backgrounds. But, paradoxically, Adam Smith's theory of…

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.…

Economic theory has provided an estimable intuition in understanding the perplexing ideologies in law, in the areas of economic law, tort law, contract law, procedural law and many others. Most legal systems require the parties involved in…