[nneonneo]

The St. Petersburg "paradox" is not a paradox if we consider any real-world implementation of it. The EV accumulates at the rate of $1 per flip. So, if we want to make the EV at least $1,000,000, we must find a counterparty that is willing to pay at least $2^1000000 (or at least 2^1000000 units of "utility" if we're trying to avoid the depreciating utility effect). That's plainly unrealistic. As soon as the counterparty has any fixed upper limit to its ability to pay (or provide utility), the EV becomes finite.

[TheOtherHobbes]

It's interesting that in this context the assumption of infinite growth is obviously unrealistic - but in the context of trad econ, infinite growth is considered a bedrock assumption.

Putting them together suggests it's flagrantly irrational to apply naive toy models to the real world. Even if they do have a nice mathy sheen.

Engineers (mostly) know this, but for some reason gamblers and economists (mostly) act as if they don't.

[lern_too_spel]

When you're this far away from saturation, infinite growth is a good approximation.

[lern_too_spel]

I don't mean specifically the St. Petersburg paradox but in the context of most things that economists analyze that have an infinite growth assumption.