The Bounded Strength of Weak Expectations

Sprenger, J. & Heesen, R., Jul-2011, In : Mind. 120, 479, p. 819-832 14 p.

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The rational price of the Pasadena and Altadena games, introduced by Nover and Hajek (2004), has been the subject of considerable discussion. Easwaran (2008) has suggested that weak expectations-the value to which the average payoffs converge in probability-can give the rational price of such games. We argue against the normative force of weak expectations in the standard framework. Furthermore, we propose to replace this framework by a bounded utility perspective: this shift renders the problem more realistic and accounts for the role of weak expectations. In particular, we demonstrate that in a bounded utility framework, all agents, even if they have different value functions and disagree on the price of an individual game, will finally agree on the rational price of a repeated, averaged game. Thus, we explain the intuitive appeal of weak expectations, while avoiding both trivialization of the original paradox and the drawbacks of previous approaches.

Original languageEnglish
Pages (from-to)819-832
Number of pages14
Issue number479
Publication statusPublished - Jul-2011
Externally publishedYes

ID: 102032968