Which of the following situations provides an example of the St.Petersburg paradox?
A) A bond offers high returns, but the public interest in it is low.
B) Employees are interested in increasing productivity, but their efforts are minimal.
C) Managerial productivity is hard to measure, but they get paid more than the others.
D) A company's profits have increased in a financial year, but it refuses to pay dividend.

Question

Quizplus · Accepted Answer

The St. Petersburg paradox is a situation in which a rational person would choose an option with a low probability of a high payoff over an option with a high probability of a low payoff, even though the expected value of the first option is lower. In this case, the bond offers high returns, but the public interest in it is low. This means that the probability of getting a high payoff is low, but the payoff is high. The other options do not involve a low probability of a high payoff, so they are not examples of the St. Petersburg paradox.

Which of the Following Situations Provides an Example of the St.Petersburg