Downloads

https://doi.org/10.58195/emi.v2i2.91
Lahiri, S. (2023). Understanding Ramsey-de Finetti Probabilities and the St. Petersburg Paradox. Economics & Management Information, 2(2), 1–4. https://doi.org/10.58195/emi.v2i2.91
Volume 2, Issue 2, December 2023
Copyright (c) 2023 Somdeb Lahiri
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Understanding Ramsey-de Finetti Probabilities and the St. Petersburg Paradox

We provide simple interpretations of probability with a view towards its potential for real world (i.e., practical) applications. Our discussion is along the lines initiated by David Ramsey and Bruno de Finetti, though we do not provide a theory of probability but merely use their axioms and results to interpret mathematical probability. Subsequently, we provide a critique as well as a resolution of the well-known St. Petersburg paradox that is consistent with expected utility theory.

Ramsey-de Finetti probability sure gain conditional probability St. Petersburg paradox

References

  1. Ramsey F. Truth and Probability. (In) The Foundations of Mathematics and Other Logical Essays; Braithwaite RB, Ed; Kegan Paul, Trench, Trubner & Co: London, UK, 1931.
  2. Ramsey F. Truth and Probability. Reprinted in Studies in Subjective Probability; Kyburg Jr HE, Smokler
  3. de Finetti B. La Prévision: Ses Lois Logiques, Ses Sources Subjectives, Ann Inst Henri Poincaré 7, 1937; 1–68. Translation reprinted in Kyburg HE, Smokler HE, Eds; Studies in Subjective Probability, 2nd edn; Robert Krieger: New York, NY, USA， 1980; 53–118.
  4. de Finetti B. Theory of Probability; John Wiley and Sons: New York, NY, USA, 1974.
  5. de Finetti B. Theory of Probability: A Critical Introductory Treatment, (Translated by Antonio Machi and Adrian Smith); John Wiley and Sons Ltd: Chichester, UK, 2007.
  6. Lahiri S. Understanding Expected Utilities for Decision Making. Management Studies. 2023; 11(2): 93–104.
  7. Nau RF. De Finetti Was Right: Probability Does Not Exist. Theory and Decision 2001; 51: 89–124. HE Eds; 2nd edition; R. E. Krieger Publishing Company: New York, NY, USA, 1980, 23–52.
  8. Velupillai K. De Finetti’s Theory of Probability and Its Jayensian Critique. Economia Politica 2015; 32(1): 85–95.
  9. Luce RD, Raiffa H. Games and Decisions: Introduction and Critical Survey; Dover Publications: Mineola, NY, USA, 1957.
  10. De Vos M. (undated): A Primer on Finite Probability Spaces. In Graph Theory. Available online: https://www.sfu.ca/~mdevos/notes/graph/ (accessed on 6 July 2023).

Supporting Agencies

  1. Funding: Not applicable.