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Allais for all: revisiting the paradox

Huck, S.; Muller, W.; (2007) Allais for all: revisiting the paradox. (ELSE Working Papers 289). ESRC Centre for Economic Learning and Social Evolution: London, UK. Green open access


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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 > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/14367
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