An evolutionary explanation of the Allais paradox

Journal of Evolutionary Economics - Tập 32 - Trang 1545-1574 - 2022
Moshe Levy1
1The Hebrew University, Jerusalem, Israel

Tóm tắt

The Allais paradox constitutes a central violation of the expected utility paradigm. The paradox is typically explained by subjective probability weighing, and has motivated and shaped the leading non-expected-utility models. But why do people weigh probabilities? We suggest a new explanation for the Allais paradox based on evolutionary theory. We show that the evolutionary goal of maximizing the probability of having descendants forever (i.e. minimizing the probability of eventual extinction) predicts the Allais paradox and the common-consequence and common-ratio effects, and thus provides a rational-expectations theoretical foundation for the experimentally observed behavior.

Tài liệu tham khảo

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