Uncommon
St. Petersburg paradox
Paradox involving a game with repeated coin flipping
St. Petersburg paradox
The St. Petersburg paradox or St. Petersburg lottery is a paradox involving the game of flipping a coin where the expected payoff of the lottery game is infinite but nevertheless seems to be worth only a very small amount to the participants. The St. Petersburg paradox is a situation where a naïve decision criterion that takes only the expected value into account predicts a course of action that presumably no actual person would be willing to take. Several resolutions to the paradox have been proposed, including the impossible amount of money a casino would need to continue the game indefinitely. The problem was invented by Nicolas Bernoulli, who stated it in a letter to Pierre Raymond de Montmort on September 9, 1713. However, the paradox takes its name from its analysis by Nicolas' cousin Daniel Bernoulli, one-time resident of Saint Petersburg, who in 1738 published his thoughts about the problem in the Commentaries of the Imperial Academy of Science of Saint Petersburg.
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