The theory of expected utility maximization (EUM) proposed by Bernoulli explains risk aversion as a consequence of … diminishing marginal utility of wealth. However, observed choices between risky lotteries are difficult to reconcile with EUM: for … sufficiently favorable large gambles) to be consistent with any utility-of-wealth function. We propose a unified explanation for …

. Overwhelming evidence shows that choice is stochastic, which has given rise to random utility models as the dominant paradigm in … choices reveal preferences without assumptions on the structure of utility noise. Sharper results are obtained if the analysis … conclude by showing that standard random utility models from economics and standard drift-diffusion models from psychology …