We develop a theory of “risky utilities”, i.e. private firms that manage an infrastructure for public service, and that … may be tempted to engage in excessively risky activities, such as reducing maintenance expenditures (at the risk of … provoking a break-down of the system) or in speculation (at the risk of incurring massive losses it cannot bear). These risky …

We propose a new measure of deviations from expected utility, given data on economic choices under risk and uncertainty … deviation (in beliefs, utility, or perceived prices) is within e of expected utility theory. The number e can then be used as a … distance to the theory. We apply our methodology to three recent large-scale experiments. Many subjects in those experiments …

We propose a new measure of deviations from expected utility, given data on economic choices under risk and uncertainty … deviation (in beliefs, utility, or perceived prices) is within e of expected utility theory. The number e can then be used as a … distance to the theory. We apply our methodology to three recent large-scale experiments. Many subjects in those experiments …

The Allais critique of expected utility theory (EUT) has led to the development of theories of choice under risk that …