Huck, S. and Muller, W. (2007) Allais for all: revisiting the paradox. (ELSE Working Papers 289). ESRC Centre for Economic Learning and Social Evolution: London, UK.
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Abstract
We administer the Allais paradox questions to, both, a representative sample of the Dutch population and to student subjects. Three treatments are implemented: one with the original high hypothetical payoffs, one with low hypothetical payoffs and a third with low real payoffs. Our key findings are-(i) a large bulk of violations stems from non-familiarity with large payoffs; (ii) we can identify groups of the general population that have much more difficulty to make consistent decisions and may, hence, be much more prone to making imprudent financial choices; this concerns mainly the lowly educated and unemployed; and (iii) the shares of violations of standard theory observed in the lab provide lower bounds for the shares of violations observed in the population at large.
| Type: | Working / discussion paper |
|---|---|
| Title: | Allais for all: revisiting the paradox |
| Open access status: | An open access version is available from UCL Discovery |
| Publisher version: | http://else.econ.ucl.ac.uk/newweb/papers.php#2007 |
| Language: | English |
| Keywords: | C93, D81 |
| UCL classification: | UCL > School of Arts and Social Sciences > Faculty of Social and Historical Sciences > Economics |
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