St. Petersburg paradox

[ergonomicon]

Let's play a game. You pay me an entry fee, then I put a dollar into the pot and we flip a coin. If the coin is tails, you take the pot, but if it's heads I'll double the pot and we'll flip again. You stand to make a good deal of money on this game. So how much should I charge for the entry fee?

The math on this one pretty much freaked me out.

Comments

[bakeme]

i got five on it.

[veovix]

Wow dude. My head is full of cough medicine right now.. just looking at that mathland wikipedia article increased my fever by 2 degrees.

*faints*

[ergonomicon]

Hahaha, don't faint! If you want to skip the math and go to the logical reasoning, this page has some really well thought-out arguments.

[kyleprime]

Wow.. That's an insane equation. But suppose if i was a casino I would need to make sure that I was taking in more then losing.

Then again, if I was a casino I would also have a cap. on the n'th role you win the grand prize. in which case this is no longer a paradox and actually a solvable problem.

Though the amount of pay-in would still be a difficult decision. the variable of greed is always a problem.