Real people are risk averse not only because of decreasing marginal utility, but also because they see “I had the choice to refuse a bet but did not take that choice, and consequently I lost money through my own choice,” as an additional bad thing distinct from losing money.
Real people are risk averse not only because of decreasing marginal utility, but also because they see “I had the choice to refuse a bet but did not take that choice, and consequently I lost money through my own choice,” as an additional bad thing distinct from losing money.