Publication
Aug 2011
According to the harmonic sequence paradox, an expected utility decision maker's willingness-to-pay for a gamble whose expected payoffs evolve according to the harmonic series is finite if and only if his marginal utility of additional income becomes zero for rather low payoff levels. The present paper presents first an experimental study of the harmonic sequence paradox. Additionally, it demonstrates that the theoretical argument of the harmonic sequence paradox only applies to time-patient decision makers whereas the paradox is easily avoided if time-impatience is introduced.
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English (PDF, 20 pages, 943 KB) |
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Author | Ulrich Schmidt, Alexander Zimper |
Series | Kiel Institute Working Papers |
Issue | 1724 |
Publisher | Kiel Institute for the World Economy |
Copyright | © 2011 Kiel Institute for the World Economy |