Abstract
Daniel Bernoulli 's classic St. Petersburg paradox is revisited in an attempt to resolve the intriguing issue; how should individual risk preference be differentiated? The authors argue that, unlike what is implied by the paradox, the fact that no person would pay a large sum of money in order to win a large payoff with a very small probability does not imply that all individuals are risk averse. The authors design a large-sample experimental test where the St. Petersburg game is simulated. The simulation results imply that the mathematical expectation of uncertain outcomes is not realized when associated with asymptotically diminishing probabilities. In such a case, it appears that there exists a "practical expected value " that is different from the theoretical expected value. The former, not the latter, must be used to determine individuals 'attitude toward risk.
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