User talk:SCMore

'Justification for altering the Expected Utility function on http://en.wikipedia.org/wiki/St._Petersburg_paradox:' The stated function was originally as follows
 * $$EU=\sum_{k=1}^\infty \frac{(\ln(w+2^{k-1}-c) - \ln(w))*w}{2^k} < \infty \,.$$

And was described as representing the summation of all (payout*probability of payout), where each payout is calculated as (ln of wealth after the event)-(ln of wealth before event) and the probability of payout as  wealth/2^k. This does not accurately represent the correct probability weighting.

The expected utility of an event should be calculated as the summation [possible payout * probability of payout], where the payout = (ln of wealth after the event)-(ln of wealth before event), and the probability of payout (p) is p = 1/(2^K). Therefore the correct Expected Utility function is:


 * $$EU=\sum_{k=1}^\infty \frac{(\ln(w+2^{k-1}-c) - \ln(w))}{2^k} < \infty \,.$$