Bernoulli Paradox

The St. Petersburg Paradox is a captivating probability puzzle that dates back to 1738 when Swiss mathematician Daniel Bernoulli first published it. This paradox challenges our intuition about decision-making and the concept of expected value by presenting a simple coin-tossing game with seemingly infinite potential rewards. At first glance, the game appears to offer immense winnings due to its high theoretical expected value. However, this apparent windfall belies a deep-rooted contradiction: people are generally unwilling to pay a large sum to play the game, despite the enticing expected value. This discrepancy forces us to reevaluate our understanding of expected value and consider the role of factors like risk aversion, diminishing marginal utility, and practical constraints in our decision-making processes. 

The St. Petersburg Paradox serves as a fascinating exploration of the complexities of probability and human behavior, shedding light on the intricate interplay between mathematical theory and real-world decision-making.

***IDEAL AS A LESSON STARTER/HOOK FOR LC HL MATHS***