Ever since Allais

Aluma Dembo, Shachar Kariv, Matthew Polisson and John K.-H. Quah

Journal of Political Economy, 2026, vol. 134, issue 6, 1846 - 1889

Abstract: The Allais critique of expected utility theory (EUT) has led to the development of theories of choice under risk that relax the independence axiom but adhere to the fundamental/conventional axioms of ordering (completeness and transitivity) and monotonicity (with respect to first-order stochastic dominance). Unlike experimental work designed to test independence, our experiment is comprehensive, testing the entire set of axioms on which EUT is based. Our econometric analysis is also nonparametric and performed at the level of each individual subject. For the vast majority of subjects, departures from independence are small relative to departures from ordering and/or monotonicity.

Date: 2026
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Working Paper: Ever Since Allais (2021)
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