Mind & Society

, Volume 4, Issue 1, pp 85–96

A note on concave utility functions

Authors

    • Department of PsychologyPrinceton University
  • Simon Grant
    • Department of EconomicsRice University
  • Daniel N. Osherson
    • Department of PsychologyPrinceton University
Article

DOI: 10.1007/s11299-005-0006-7

Cite this article as:
Monti, M.M., Grant, S. & Osherson, D.N. Mind & Society (2005) 4: 85. doi:10.1007/s11299-005-0006-7

Abstract

The classical theory of preference among monetary bets represents people as expected utility maximizers with concave utility functions. Critics of this account often rely on assumptions about preferences over wide ranges of total wealth. We derive a prediction of the theory that bears on bets at any fixed level of wealth, and test the prediction behaviorally. Our results are discrepant with the classical account. Competing theories are also examined in light of our data.

Keywords

GamblingRisk aversionConcave utility functionExpected utilityProspect theory

Copyright information

© Fondazione-Rosselli 2005