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 which adhere to the conventional …

A contemporary research agenda in behavioral economics and neuroeconomics aims to
identify individual differences and (neuro) psychological correlates of rationality. This …

Behavioural economics has not only posed serious challenges for the empirical adequacy of
rational choice, but also for its normative status. Since the 1990s, a large body of work has …

Risk aversion is typically inferred from real or hypothetical choices over risky lotteries, but
such “untutored” choices may reflect mistakes rather than preferences. We develop a …

We experimentally implement security-bid auctions, which are used around the world to sell
projects that generate large future cash flows that are stochastic. Buyers make bids with debt …

Prospect Theory provides a broad and solid frame of reference for modeling the decision
making of rational agents. In the early 1990s, the structure of Prospect Theory was used to …

We provide necessary and sufficient conditions for expected utility and risk-averse expected
utility to rationalize behavior when the decision maker faces linear probability-prize …

Previous literature analyzing the effects of incentive compatibility of experimental payment
mechanisms is dominated by theory. With overwhelming evidence of theory violations in a …

Axiom Preferences and Choice Mistakes under Risk Page 1 Axiom Preferences and Choice
Mistakes under Risk ∗ Fabian Herweg † Svenja Hippel ‡ Daniel Müller § Fabio Römeis ¶ …

Multiple reasons for “inconsistent” preferences over risks have been proposed. A leading
explanation, incompleteness, is notoriously elusive to measure with standard choice data …