The Fair Betting Utility Interpretation of Probability

Part of the Lecture Notes in Statistics book series (LNS, volume 189)


Consider again the origins of our subject. The formulation of the de Mere-Pascal-Fermat problem of points was not in terms of equally likely or frequency or personal degree of belief but as a question concerning the value of a player’s position in the game. The issue in general is, if one is to receive a prize or payment, but the amount of that payment is uncertain, then how does that uncertainty affect the value of the prize? A modern development is that this question has been answered in terms of a personal price interpretation of probability. This chapter is our version of the details.


Unit Price Initial Endowment Fair Price Axiomatic Theory Risk Neutrality 
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© Springer Science+Business Media, LLC 2007

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