Dutch book

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Bruno de Finetti (1906—1985)

Frank Plumpton Ramsey (1903—1930) mathematician and philosopher


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A money pump in which a person holds intransitive or cyclic preferences, for example, preferring x to y, y to z, and z to x. Such a person is therefore willing to pay to have any of them exchanged for one that is preferred to it, and is then willing to pay to have that one exchanged for another, and so on indefinitely. The property that differentiates a Dutch book from any other money pump is that the price for each exchange is lowered until the person is willing to pay for it, although the term is often used as a synonym for a money pump. [Probably named after a Dutch auction in which the price of a lot is reduced by steps until a buyer comes forward]

Subjects: Psychology — Philosophy.

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