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Behavioral Decision Theory pp 77–88Cite as

Preference Paradox and Nonlinear Expected Utility Theory

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Abstract

The previous chapter explained that expected utility theory included counterexamples called the Allais paradox (Allais 1953) and the Ellsberg paradox (Ellsberg 1961). The Allais and Ellsberg paradoxes are interpreted as deviations from the independence axiom. This chapter first explains the relations between these paradoxes and the independence axiom.

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Authors and Affiliations

  1. Department of Psychology, Waseda University, 1-24-1 Toyama, Shinjuku-ku, Tokyo, 108-8345, Japan

    Professor Kazuhisa Takemura

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  1. Professor Kazuhisa Takemura
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Takemura, K. (2014). Preference Paradox and Nonlinear Expected Utility Theory. In: Behavioral Decision Theory. Springer, Tokyo. https://doi.org/10.1007/978-4-431-54580-4_7

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