Preferences UnderUncertainty and the Deficiencies of the Expected Utility Model

In economics, the prevailing framework to explain preferences under uncerta- inty is the Expected Utility theory. Despite its widespread use, the Expected Utility theory is not free from problems. Experimental and empirical works shows that, in real life, the choices of individuals among risky alternatives conflict with the axioms of the Expected Utility theory. This study, in the light of experimental studies, investigates the problems with the Expected Utility theory regarding the individuals’preferences under risk.