Mad Money Machine

How much would you pay to take Paul’s place?

Based upon something called the Petersburg Paradox, I have created a market at Inkling (inklingmarkets.com) called Petersburg’s Payout.

I will flip a coin until it comes up heads. Tails pays nothing. But if it comes up heads the first time, I will pay Paul $2. If it comes up heads the 2nd time, I will pay Paul $4. If it is the 3rd time, Paul gets $8. If it is the 4th time, Paul gets $16 and so on until heads comes up. How much will you be willing to pay Paul to take his place in the Petersburg Payout game?

The payout will be on a PER SHARE basis, so if heads comes upon on the 4th flip, the payout will be $16 per share. (I think… this is my first market and not sure this is going to work.)

There are two days where I will flip the coin: 30 August and 27 September.

I’ll be talking about this on my next show. Not sure if this will work out as something interesting or not, but hey, it doesn’t cost anything so let’s let it float up and see…

Here’s more than you’d ever want to know about the Petersburg Paradox.