Certain and uncertain utility: The allais paradox and five decision theory phenomena

  • Andreoni J
  • Sprenger C
  • 60


    Mendeley users who have this article in their library.
  • N/A


    Citations of this article.


In the study of decision making under risk, preferences are assumed to be continuous. We present a model of discontinuous preferences over certain and uncertain outcomes. Us- ing existing parameter estimates for certain and uncertain utility, ve important decision theory phenomena are discussed: the certainty e ect, experimentally observed probability weighting, the uncertainty e ect, extreme experimental risk aversion and quasi-hyperbolic discounting. All ve phenomena can be resolved.

Author-supplied keywords

  • allais paradox
  • dynamic inconsistency
  • probability
  • risk aversion
  • uncertainty effect

Get free article suggestions today

Mendeley saves you time finding and organizing research

Sign up here
Already have an account ?Sign in

Find this document

There are no full text links


  • James Andreoni

  • Charles Sprenger

Cite this document

Choose a citation style from the tabs below

Save time finding and organizing research with Mendeley

Sign up for free