The Bounded Strength of Weak Expectations

The rational price of the Pasadena Game, a game introduced by Nover and Hájek (2004), has been the subject of considerable discussion. Easwa-ran (2008) has suggested that weak expectations – the value to which the average payoffs converge in probability – can give the rational price of the game. We argue against the normative force of weak expectations in the standard framework. Furthermore, we propose to replace this framework by a bounded utility perspective: this shift renders the problem more re-alistic and accounts for the role of weak expectations. In particular, we demonstrate that in a bounded utility framework, all agents, even if they have different value functions and disagree on the price of an individual Pasadena Game, will finally agree on the rational price of a repeated, av-eraged game. Thus, we provide a realistic and comprehensive account of the Pasadena Game that explains the intuitive appeal of weak expecta-tions, while avoiding both trivialization of the game and the drawbacks of previous approaches.