Mind & Society

, Volume 4, Issue 1, pp 85-96

A note on concave utility functions

  • Martin M. MontiAffiliated withDepartment of Psychology, Princeton University Email author 
  • , Simon GrantAffiliated withDepartment of Economics, Rice University
  • , Daniel N. OshersonAffiliated withDepartment of Psychology, Princeton University

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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.


Gambling Risk aversion Concave utility function Expected utility Prospect theory