Learning in the Allais paradox

Gijs Kuilen and Peter Wakker

Journal of Risk and Uncertainty, 2006, vol. 33, issue 3, 155-164

Abstract: 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 opportunity to learn by both thought and experience, but less so when they learn by thought only. To the extent that genuine preferences should be measured with proper learning and incentives, our study gives the first pure demonstration that irrationalities such as in the Allais paradox are less pronounced than often thought. Copyright Springer Science + Business Media, LLC 2006

Keywords: Learning; Rational choice; Allais paradox; Nonexpected utility (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (29)

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DOI: 10.1007/s11166-006-0390-3

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