During the development of modern probability theory in the 17th cen tury it was commonly held that the attractiveness of a gamble offering the payoffs:1:17: l: with probabilities Pl, . . ., Pn is given by its expected n value L:: l: iPi. Accordingly, the decision problem of choosing among different such gambles - which will be called prospects or lotteries in the sequel-was thought to be solved by maximizing the corresponding expected values. The famous St. Petersburg paradox posed by Nicholas Bernoulli in 1728, however, conclusively demonstrated the fact that individuals l consider more than...
During the development of modern probability theory in the 17th cen tury it was commonly held that the attractiveness of a gamble offering the payoffs...
