Summary: the problem with Pascal's Mugging arguments is that, intuitively, some probabilities are just too small to care about. There might be a principled reason for ignoring some probabilities, namely that they violate an implicit assumption behind expected utility theory. This suggests a possible approach for formally defining a "probability small enough to ignore", though there's still a bit of arbitrariness in it.
One easy way to do this is to map an unbounded utility function onto a finite interval. You will end up with the same order of preferences, but your choices won't always be the same. In particular you will start avoiding cases of the mugging.
Not really avoiding -- a bound on your utility in the context of a Pascal's Mugging is basically a bound on what the Mugger can offer you. For any probability of what the Mugger promises there is some non-zero amount that you would be willing to pay and that amount is a function of your bound (and of the probability, of course).
However utility asymptotically approaching a bound is likely to have its own set of problems. Here is a scenario after five seconds of thinking:
That vexatious chap Omega ... (read more)