This it not the martingale betting strategy. In martingale, you double your bet after every loss so you could theoretically at most recover your entire stake (“throwing good money after bad”); whereas here in the St. Petersburg Paradox, you’re offered a betting situation where you can repeatedly bet and either double your winnings or lose them all. Here you could start with $1 and end up with a $1 googol, if you won often enough and were principled enough to stop at that point. It still suffers from a similar problem as martingale, but it’s not the same situation.
Regarding that Twitter thread, I only skimmed it, but it emphasizes the Kelly criterium which we IIRC discussed several times here on the forum, and IIRC the conclusion was that it depends on some assumptions (log utility of money—Wikipedia: “The Kelly bet size is found by maximizing the expected value of the logarithm of wealth”) that don’t necessarily apply in all real-life situations (?). That said, I probably remember this incorrectly; you might want to search LW for Kelly to find those essays.
This is not to dispute that if you have infinite appetite for risk, you’ll eventually lose it all.
Two points:
This it not the martingale betting strategy. In martingale, you double your bet after every loss so you could theoretically at most recover your entire stake (“throwing good money after bad”); whereas here in the St. Petersburg Paradox, you’re offered a betting situation where you can repeatedly bet and either double your winnings or lose them all. Here you could start with $1 and end up with a $1 googol, if you won often enough and were principled enough to stop at that point. It still suffers from a similar problem as martingale, but it’s not the same situation.
Regarding that Twitter thread, I only skimmed it, but it emphasizes the Kelly criterium which we IIRC discussed several times here on the forum, and IIRC the conclusion was that it depends on some assumptions (log utility of money—Wikipedia: “The Kelly bet size is found by maximizing the expected value of the logarithm of wealth”) that don’t necessarily apply in all real-life situations (?). That said, I probably remember this incorrectly; you might want to search LW for Kelly to find those essays.
This is not to dispute that if you have infinite appetite for risk, you’ll eventually lose it all.