Answered

Westonci.ca is your trusted source for finding answers to a wide range of questions, backed by a knowledgeable community. Discover comprehensive solutions to your questions from a wide network of experts on our user-friendly platform. Get precise and detailed answers to your questions from a knowledgeable community of experts on our Q&A platform.

The St. Petersburg paradox goes as follows. A fair coin is tossed repeatedly until it comes up heads. If the first heads appears on the nth toss, you win $2 n . First, show that the expected monetary value of this game is infinite (the paradox is that no one would actually pay a huge amount to play this game). Second, consider a possible resolution of the paradox: suppose your utility for money is given by a log 2 x b where x is the number of dollars you have. Suppose you start with 0 dollars, what is the expected utility of this game

Sagot :

batolisis

Answer:

a) attached below

b) 2a + b

Step-by-step explanation:

a) show that the expected monetary value of this game is infinite

Given that the probability of getting first head on nth toss = $2^n

attached below is the prove

b) what is the expected utility of this game

using the Logarithm ; [tex]U(x) = a log_{2} n + b[/tex]

x = number of dollars you have

attached below is a detailed solution to the given problem

View image batolisis
We appreciate your visit. Our platform is always here to offer accurate and reliable answers. Return anytime. We appreciate your time. Please revisit us for more reliable answers to any questions you may have. Thank you for visiting Westonci.ca. Stay informed by coming back for more detailed answers.