Euros as bad at math as Americans

[Verily]

You don't have to be bad at math to be bad at probability and rational choice. (Plus, rational choice sometimes tells us to do stupid things, as in the St. Petersburg paradox.)

[Verily]

You don't have to be bad at math to be bad at probability and rational choice. (Plus, rational choice sometimes tells us to do stupid things, as in the St. Petersburg paradox.)

Rational choice emphatically does not imply anything stupid in St. Petersburg paradox. Rational choice has nothing to do w/ evaluating monetary lotteries at their expected monetary value. In fact, as a professor who teaches rational choice I can tell you the following: if you answer like this on an exam you'll fail

And you would fail as a rational choice professor, because you would not be able to explain why the St. Petersburg paradox doesn't apply when the item(s) to be won are utiles rather than monetary units.

Rational choice most emphatically does imply something stupid in the St. Petersburg paradox. Now, you might want to limit rational choice to cases not involving infinity, but rational choice as a subject does not claim to be limited by such trivial notions as the infinite.

[Verily]

You don't have to be bad at math to be bad at probability and rational choice. (Plus, rational choice sometimes tells us to do stupid things, as in the St. Petersburg paradox.)

Rational choice emphatically does not imply anything stupid in St. Petersburg paradox. Rational choice has nothing to do w/ evaluating monetary lotteries at their expected monetary value. In fact, as a professor who teaches rational choice I can tell you the following: if you answer like this on an exam you'll fail

And you would fail as a rational choice professor, because you would not be able to explain why the St. Petersburg paradox doesn't apply when the item(s) to be won are utiles rather than monetary units.

Not only I'd be able to explain it - I do exactly that every semester, sometimes twice Of course, not, really, that it doesn't apply, but rather that there isn't a real paradox.

Ok. What's St. Petersburg paradox? It's an example of a lottery of infinite expected monetary value that few people would care to purchase even for peanuts. It is used, primarily, to illustrate the point that expected monetary value of lotteries have little to do with individual preferences over it. Bernoulli himself (the one who coined the "paradoxical" example) suggested that it could be easily explained if one assumed "decreasing marginal utility of money". To avoid the problems with the notion of "preference intensity" (in rational choice we don't like it ), modern utility theory gives a  more nuanced explanation (which I would need about half a lecture to set up), but the basic intuition of Bernoulli is there as well.  At the very least, attempting to value monetary lotteries using their expected value is viewed as big and ugly mistake: if you do this in an exam, you fail.

Now, your point about "utiles" is even worse: "utiles" don't exist. There isn't a "standard unit of happiness" not even in a vault in Paris, like a kilo. We can talk about utillity (even expected utility) representation of preferences, but that's something alltogether different.

But even if they did exist, there would be no problem. Preferences (and, hence, utilities) are subjective, not in any sense "intrinsic" or "objective". The fact that nobody chooses to sell their house for the St. Petersburg lottery is evidence of common preferences in that regard. Now, there is nothing "(ir)rational" about any given price for a lottery. When economists/rational choice theorists talk about an individual's "rationality" all they mean is that his/her preferences  satisfy a couple of basic consistency conditions (completeness and transitivity) - no more, no less. Any price for any given lottery, from negative to positive infinity, could be consistent with rationality. Not to mention the point, that even to meaningfully take expectations over the utilities you need to assume something (independence) far above and beyond rationality itself.

Please, take a good microecon/decision theory course - it's worth it, it's lots of fun (and you'd clear up all the misunderstandings you are having right now).  Perhaps, I should give a tutorial

PS I suggest moving this thread to the Economics board.

I have some training in this as well, although of course not to the extent you have. However, I can't help but feeling that you are taking a particular school of thought in rationality and ascribing it to all of rational choice somewhat indiscriminately. Yes, we can say subjectively that the decision to refuse to play the St. Petersburg Game is rational--but, at the purest level, rational choice claims to be able to predict the best decision mathematically. That these mathematical calculations have serious problems you don't deny--you just don't call them rational. But plenty of rational choice theoreticians would disagree with you.

(In other words, your position is that in order to be rational it must make sense (the commonsense definition, and not a bad one), while others in decision theory say that rationality doesn't actually need to make sense.)