Mind & Society

, Volume 4, Issue 1, pp 85–96

A note on concave utility functions

  • Martin M. Monti
  • Simon Grant
  • Daniel N. Osherson
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

Authors and Affiliations

  • Martin M. Monti
    • 1
  • Simon Grant
    • 2
  • Daniel N. Osherson
    • 1
  1. 1.Department of PsychologyPrinceton UniversityPrincetonUSA
  2. 2.Department of EconomicsRice UniversityHoustonUSA