Friedman and Savage’s Times

Abstract

The St Petersburg Paradox demonstrated the fundamental incongruency between the measurement of probability and risk, and our human response to it. Bernoulli pointed out that humans would not pay an arbitrarily large amount for an infinite return with a probability of less than one. In his hints at how to resolve the Paradox, he noted that it is our subjective human regard for probability that is more relevant than the sterile, rational, mathematic measurement of objective probability.