{"pk":28569,"title":"A Resource-Rational Process-Level Account of the St. Petersburg Paradox","subtitle":null,"abstract":"The St. Petersburg paradox is a centuries-old philosophicalpuzzle concerning a lottery with infinite expected payoff,on which people are, nevertheless, willing to place only asmall bid. Despite many attempts and several proposals, nogenerally-accepted resolution is yet at hand. In this work, wepresent the first resource-rational process-level explanation ofthis paradox, demonstrating that it can be accounted for by avariant of normative expected-utility-maximization which ac-knowledges cognitive limitations. Specifically, we show thatNobandegani et al.’s (2018) metacognitively-rational model,sample-based expected utility (SbEU), can account for majorexperimental findings on this paradox. Crucially, our resolu-tion is consistent with two empirically well-supported assump-tions: (1) people use only a few samples in probabilistic judg-ments and decision-making, and (2) people tend to overesti-mate the probability of extreme events in their judgment.","language":"eng","license":{"name":"","short_name":"","text":null,"url":""},"keywords":[{"word":"St. Petersburg Paradox; bounded rationality;resource-rational process models; expected utility theory; in-ference by sampling"}],"section":"Papers with Oral Presentations","is_remote":true,"remote_url":"https://escholarship.org/uc/item/2c90v6k5","frozenauthors":[{"first_name":"Ardavan","middle_name":"S.","last_name":"Nobandegani","name_suffix":"","institution":"McGill University","department":""},{"first_name":"Kevin","middle_name":"da Silva","last_name":"Castanheira","name_suffix":"","institution":"McGill University","department":""},{"first_name":"Thomas","middle_name":"R.","last_name":"Shultz","name_suffix":"","institution":"McGill University","department":""},{"first_name":"A. Ross","middle_name":"","last_name":"Otto","name_suffix":"","institution":"McGill University","department":""}],"date_submitted":null,"date_accepted":null,"date_published":"2019-01-01T18:00:00Z","render_galley":null,"galleys":[{"label":"PDF","type":"pdf","path":"https://journalpub.escholarship.org/cognitivesciencesociety/article/28569/galley/18440/download/"}]}