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Towards a Positive Theory of Preferences under Risk

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Expected Utility Hypotheses and the Allais Paradox

Part of the book series: Theory and Decision Library ((TDLU,volume 21))

Abstract

A previously published model, based on introspective cardinalism, is summarized. A slightly revised version more clearly implies predictions of ‘paradoxes’ while excluding ‘counter paradoxes’, i.e. deviations from the Neumann-Morgensternconsistent behaviour in the opposite direction.

Empirical tests on school teachers and a new test on science faculty confirm asymmetric deviation from N-M-consistent behaviour.

The result of the theoretical development and the empirical evidence is also expressed in ordinalistic language in a field of preferences.

In a space where coordinates are probabilities for prizes indifference sets are convex towards the origin and somewhat twisted as compared with the parallel and linear sets of equal expected utility.

A normally built truth lives — let me say — as a rule some 17–18, at the outside 20 years: rarely longer.

‘Doctor Stockmann’ in An Enemy of the People, by Henrik Ibsen.

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Author information

Authors and Affiliations

  1. Bedriftsoekonomisk Institutt, Oslo Institute of Business Administration, Norway

    Ole Hagen

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  1. Ole Hagen
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Editor information

Editors and Affiliations

  1. Centre d’Analyse Economique, Ecole Nationale Supérieure des Mines de Paris, Centre National de la Recherche Scientifique, France

    Maurice Allais

  2. Bedriftsoekonomisk Institutt, Oslo Institute of Business Administration, Norway

    Ole Hagen

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© 1979 Springer Science+Business Media Dordrecht

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Hagen, O. (1979). Towards a Positive Theory of Preferences under Risk. In: Allais, M., Hagen, O. (eds) Expected Utility Hypotheses and the Allais Paradox. Theory and Decision Library, vol 21. Springer, Dordrecht. https://doi.org/10.1007/978-94-015-7629-1_13

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  • DOI: https://doi.org/10.1007/978-94-015-7629-1_13

  • Publisher Name: Springer, Dordrecht

  • Print ISBN: 978-90-481-8354-8

  • Online ISBN: 978-94-015-7629-1

  • eBook Packages: Springer Book Archive

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