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(Solved): A person tosses a fair coin until a tail appears for the first time. If the tail appears on the nth ...



A person tosses a fair coin until a tail appears for the first time. If the tail appears on the nth flip, the person wins 2n dollars. Let X denote the player’s winnings. Show that E[X] = \infty . This problem is known as the St. Petersburg paradox. (a) Would you be willing to pay $1 million to play this game once? (b) Would you be willing to pay $1 million for each game if you could play for as long as you liked and only had to settle up when you stopped playing?



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