Apresentando Alphonse Allais

Allais paradox pdf

Allais , Stability , and Liapunov Theory

To make a discovery is to achieve one of the closest approximations to a property right that the scientific career affords. Professional prestige is often closely associated with these acquisitions. Small wonder, then, that acrimonious disputes about priority and independence in discovery have often marred the normally placid tenor of scientific communication. Even less wonder that many histori...

Learning in the Allais paradox

Whereas both the Allais paradox, the first empirical challenge of the classical rationality assumptions, and learning have been the focus of many experimental investigations, no experimental study exists today into learning in the pure context of the Allais paradox. This paper presents such a study. We find that choices converge to expected utility maximization if subjects are given the opportu...

Two Errors in the ' Allais Impossibility Theorem

In his so-called 'Allais Impossibility Theorem', Allais (1988) asserts that the technique of 'generalized expected utility analysis' from Machina (1982) is invalid, on the grounds that its key tool, the 'local utility function', cannot be well-defined for preferences over finite-outcome lotteries. This paper presents a brief description of the local utility function and a summary of Allais' arg...

Allais, Ellsberg, and preferences for hedging

Two of the most well known regularities observed in preferences under risk and uncertainty are ambiguity aversion and the Allais paradox. We study the behavior of an agent who can display both tendencies simultaneously. We introduce a novel notion of preference for hedging that applies to both objective lotteries and uncertain acts. We show that this axiom, together with other standard ones, is...