Framing effects (risk preferences reverse for gains vs. losses) and the Allais paradox (risk preferences reverse when an option is certain vs. not) are major violations of rational choice theory. In contrast to typical samples, certified public accountants who are competent in working with probabilities and expected values should be an ideal test case for rational choice, especially high scorers on the cognitive reflection test (CRT). Although dual-process theories emphasize numeracy and cognitive reflection, fuzzy-trace theory emphasizes gist-based intuition to explain these effects among cognitively advanced decision-makers. Thus, we recruited a high-numeracy sample of certified public accountants (N = 259) and students (N = 648). We administered classic dread-disease framing, business framing, and Allais paradox problems and the CRT. Each participant received a gain and loss framing problem from different domains (one disease and one business), with presentation order counterbalanced across participants. Order of Allais problems was counterbalanced within participants. Within-participants (cross-domain) framing, between-participants (within-domain) framing, and the Allais paradox were observed for both samples. Accountants did not show domain-specific attenuation (differentially smaller framing) for business problems. Despite large expected-value differences between Allais problem options, accountants' choices resembled students' choices. Contrary to dual-process theories, CRT scores were positively related to framing for students (more framing with higher CRT) and inconsistently related for accountants, but high scorers had robust framing effects; high scorers also showed the Allais paradox. Results are consistent with fuzzy-trace theory's expectation that experts show framing effects because they rely primarily on gist-based intuition, not because they lack numeracy or cognitive reflection. (PsycInfo Database Record (c) 2025 APA, all rights reserved).

Abstract This paper proposes that there is a set of behavioral deviations from standard rational choices that differs from the rest of the deviations. This set is characterized by anxiety-based choices that are truly non-rational, whereas the rest consists of deviations that are actually rational once we take into consideration the role of reference points. This paper registers that the behavioral sciences literature conflates anxiety-based deviations with anxiety-free deviations. This conflation is probably the outcome of this literature’s cognitivist framework, which ignores the upheavals of the self. Anxiety is rather a manifestation of the upheavals of the self, where the self is inflicted by conflicting passions, apprehensions, and everyday difficulties in making decisions. Such upheavals undermine the formation of coherent preferences, which is guaranteed by the completeness axiom. This paper identifies a few anxiety-based deviations: the Allais paradox, procrastination, addictions, Keynesian expectations, the hot hand fallacy, the gambler’s fallacy, leadership awe, the Ellsberg paradox, and deliberate ignorance. Nevertheless, this set of anxiety-based deviations leaves out a heap of anxiety-free deviations—such as succumbing to temptations, the demand for equity that informs the ultimatum game, heuristics that sometimes lead to biases, the endowment effect, etc. The contribution of this paper lies in proposing a criterion, namely, the role of reference points, that can help us delineate anxiety-based from anxiety-free deviations from rationality.

The axiomatic framework of quantum game theory gives us a new platform for exploring economics by resolving the foundational problems that have long plagued the expected utility hypothesis. This platform gives us a previously unrecognized tool in economics, the statistical ensemble, which we apply across three distinct economic spheres. We examine choice under uncertainty and find that the Allais paradox disappears. For over seventy years, this paradox has acted as a barrier to investigating human choice by masking actual choice heuristics. We discover a powerful connection between the canonical ensemble and neoclassical economics and demonstrate this connection's predictive capability by examining income distributions in the United States over 24 years. This model is an astonishingly accurate predictor of economic behavior, using just the income distribution and the total exergy input into the economy. Finally, we examine the ideas of equality of outcome versus equality of opportunity. We show how to formally consider equality of outcome as a Bose-Einstein condensate and how its achievement leads to a corresponding collapse in economic activity. We call this new platform 'statistical economics' due to its reliance on statistical ensembles.

The dependence of classic and dual common consequence effects on the choice-set outcome range: From the perspective of probability weights

Abstract Salience theory relies on the assumption that not only the marginal distribution of lotteries, but also the correlation of payoffs across states impacts choices. Recent experimental studies on salience theory seem to provide evidence in favor of such correlation effects. However, these studies fail to control for event-splitting effects (ESE). In this paper, we seek to disentangle the role of correlation and event-splitting in two settings: (1) the common consequence Allais paradox as studied by Bordalo et al. (Q J Econ 127:1243–1285, 2012), Frydman and Mormann (The role of salience in choice under risk: An experimental investigation. Working Paper, 2018), and Bruhin et al. (J Risk Uncertain 65:139–184, 2022); (2) choices between Mao pairs as studied by Dertwinkel-Kalt and Köster (J Eur Econ Assoc 18:2057–2107, 2020). In both settings, we find evidence suggesting that recent findings supporting correlation effects are largely driven by ESE. Once controlling for ESE, we find no consistent evidence for correlation effects. Our results thus shed doubt on the validity of salience theory in describing risky behavior.

Does the Allais paradox survive with non-monetary consequences?

The subject matter of the article is the theoretical-methodical and applied principles of behavioural economics and their implementation in Ukrainian society. The goal of the work is to analyse the theory of irrationality in the economic context to find out what its character is in modern Ukrainian conditions, as well as to confirm the main paradoxes inherent in the individual’s decision-making behaviour. The following tasks were solved in the article: highlighting important aspects of the theory of irrationality for experimental analysis; determination of the methodology of experiments based on internationally recognized works; proposing a hypothesis regarding Ukrainian realities; conducting experiments according to the proposed methodology to test the proposed hypotheses and systematize the obtained results. The following methods are used: analytical and inductive methods for determining the set of behavioural experiments and building hypotheses regarding their results; experimental method and method of mathematical processing to check the presence of selected behavioural deviations in Ukraine. The following results were obtained: it was determined that in Ukrainian society there is a difference between the degree of individualistic attitudes in different age groups; determined change in the perception of information of different generations as a result of more significant digitization of the young population; a higher tendency of children to risk for certain conditions is determined; the similarity of the obtained results of the experiments with the global ones are established and the impact of technologies on the economic behaviour of individuals and the peculiarities caused by the historical context and expanded access to information, in general, are determined. Conclusions: the use of analytical and inductive methods in combination with an experimental approach confirmed the existence of some of the classic behavioural patterns for modern Ukrainian society, in particular: the Allais paradox, the effect of bounded rationality, the effect of joining the majority, the effect of ownership and asymmetric dominance. In addition, based on the obtained results, it was determined that for Ukraine there is a significant difference between the nature of irrationality in different age groups, however, the postulation of this statement beyond the selected target groups requires additional research, as well as consideration of the context of other market entities.

Non-additive measures, also known as fuzzy measures, capacities, and monotonic games, are increasingly used in different fields. Applications have been built within computer science and artificial intelligence related to e.g., decision making, image processing, machine learning for both classification, and regression. Tools for measure identification have been built. In short, as non-additive measures are more general than additive ones (i.e., than probabilities), they have better modeling capabilities allowing to model situations and problems that cannot be modeled by the latter. See e.g., the application of non-additive measures and the Choquet integral to model both Ellsberg paradox and Allais paradox. Because of that, there is an increasing need to analyze non-additive measures.The optimal transport problem is a useful tool for probabilities. It is used to define the Wasserstein distance, and also to solve problems as data matching. In this work with tackle the problem of defining the optimal transport problem for non-additive measures. We consider that it is necessary to provide appropriate definitions with a flavour similar to the one for probabilities, but for non-additive measures. The solutions should generalize the classical ones.We provide definitions based on the Möbius transform, but also based on the (max,+)-transform that we consider that has some advantages. We will discuss in this paper the problems that arise to define the transport problem for non-additive measures, and provide ways to solve them. We include the definitions of the optimal transport problem, and prove some properties. We also conclude providing a definition of the Wasserstein distance for non-additive measures.

Expected subjective value theory (ESVT): A representation of decision under risk and certainty

Nonlinear desirability theory

We prove the existence of an expected utility function for preferences over probabilistic prospects satisfying Strict Monotonicity, Indifference, the Common Ratio Property, Substitution and Reducibility of Extreme Prospects. The example in [1] that is inconsistent with the existence of a von Neumann-Morgenstern for preferences over probabilistic prospects, violates the Common Ratio Property. Subsequently, we prove the existence of expected utility functions with piecewise linear Bernoulli utility functions for preferences that are piece-wise linear. For this case a weaker version of the Indifference Assumption that is used in the earlier existence theorems is sufficient. We also state analogous results for probabilistic lotteries. We do not require any compound prospects or mixture spaces to prove any of our results. In the third last section of this paper, we ?argue? that the observations related to Allais paradox, do not constitute a violation of expected utility maximization by individuals, but is a likely manifestation of individuals assigning (experiment or menu-dependent?) subjective probabilities to events which disagree with their objective probabilities.

An experimental investigation of the Allais paradox with subjective probabilities and correlated outcomes

The literature suggests that probability weighting and choice set dependence influence risky choices. However, their relative importance remains an open question. We present a joint test that uses binary choices between lotteries provoking Common Consequence and Common Ratio Allais Paradoxes and manipulates their joint payoff distribution. We show non-parametrically that probability weighting and choice set dependence both play a role at describing aggregate choices. To parsimoniously account for heterogeneity, we also estimate a structural model using a finite mixture approach. The model uncovers substantial heterogeneity and classifies subjects into three types: 38% Prospect Theory types whose choices are predominantly driven by probability weighting, 34% Salience Theory types whose choices are predominantly driven by choice set dependence, and 28% Expected Utility Theory types. The model predicts type-specific differences in the frequency of preference reversals out-of-sample, i.e., in choices with a different context than the ones used for estimating the model. Moreover, the out-of-sample predictions indicate that the choice context shapes the influence of choice set dependence.

The common-ratio effect and the Allais Paradox (common-consequence effect) are the two best‐known violations of Expected Utility Theory. We reexamine data from 39 articles reporting experiments (143 designs/parameterizations, 14,909 observations) and find that the common-ratio effect is systematically affected by experimental design and implementation choices. The common-ratio effect is more likely to be observed in experiments with a low common-ratio factor, a high ratio of middle to highest outcome, when lotteries are presented as simple probability distributions (not in a compound/frequency form), and with high hypothetical incentives.

The normalized expected utility – entropy and variance model for decisions under risk

Expected utility with threshold disappointment sensitivity

The Allais Paradox, or the common consequence effect, is a well-known behavioral regularity in individual decision-making under risk. Data from 81 experiments reported in 29 studies reveal that the Allais Paradox is a fragile empirical finding. The Allais Paradox is likely to be observed in experiments with high hypothetical payoffs, the medium outcome being close to the highest outcome and when lotteries are presented as a probability distribution (not in a compound form). The Allais Paradox is likely to be reversed in experiments when the probability mass is equally split between the lowest and highest outcomes in risky lotteries. (JEL D44, D81)

Abstract The axioms of expected utility and discounted utility theory have been tested extensively. In contrast, the axioms of social welfare functions have only been tested in a few questionnaire studies involving choices between hypothetical income distributions. In a controlled experiment with 100 subjects placed in the role of social planners, we test five fundamental properties of social welfare functions to determine the efficacy of traditional social choice models in predicting social planner allocations when presented with choice sets designed to test the axioms of the theory. We find that three properties of the standard social welfare functions tested are systematically violated, producing an Allais paradox, a common ratio effect, and a framing effect in social choice. We find support for scale invariance and a preference for tail-increasing transfers. Our experiment also enables us to test a model of salience-based social choice which predicts the systematic deviations and highlights the close relationship between these anomalies and the classical paradoxes for risk and time.

PurposeThis study examines the relationship between rationality and creativity by means of social identity theory for the Greek society (2019–2020).Design/methodology/approachThe outline of the social identity was given through self-categorization via a distributed questionnaire. The types of behavior (rational, nonrational and loss-averse) were determined by using questions based on the Allais paradox. Principal components analysis (PCA) is used to extract the causal relationships.FindingsThe study findings demonstrate that rational individuals are more prompt to creative personality than nonrational individuals. Rational individuals are motivated to pursue creativity through life-improvement goals. Loss-averse individuals are driven through the contradictive incentive of adventure-seeking behavior without, however, being willing to easily give up their established assets.Originality/valueThis article contributes by explaining creativity among rational, nonrational and loss-averse individuals as a product of social identity theory. This contributes to the literature, by proposing that the application of social theories in economics could constitute a different foundation for economics. This refers to the notion of the social microfoundations of the political economy and macroeconomics.

An asymmetrical property of the probability weighting function, namely, subproportionality, was derived from observations. Subproportionality can provide a reasonable explanation for accommodating the Allais paradox and, therefore, deserves replication for its high impact. The present study aimed to explore the mechanism of subproportionality by comparing the two completely opposite decision mechanisms: prospect theory and equate-to-differentiate theory. Results revealed that the underlying mechanism supports the prediction of equate-to-differentiate theory but not prospect theory in the diagnostic stimuli condition. Knowledge regarding which intra-dimensional difference between Options A and B is greater, not knowledge regarding which option’s overall prospect value is greater, indeed predicts option preference. Our findings may deepen current understanding on the mechanisms behind the simple risky choice with a single-non-zero outcome. Additionally, these findings will hopefully encourage subsequent researchers to take a fresh look at the Allais paradox.