Allais did more than point out that human behavior disobeys utility theory, specifically the “Sure Thing Principle” or “Independence Axiom”. He also argued—to my mind, successfully—that there needn’t be anything irrational about violating the axiom.
Allais did more than point out that human behavior disobeys utility theory, specifically the “Sure Thing Principle” or “Independence Axiom”. He also argued—to my mind, successfully—that there needn’t be anything irrational about violating the axiom.