A note on concave utility functions

Mind and Society 4 (1):85-96 (2005)

Abstract

The classical theory of preference among monetary bets represents people as expected utility maximizers with concave utility functions. Critics of this account often rely on assumptions about preferences over wide ranges of total wealth. We derive a prediction of the theory that bears on bets at any fixed level of wealth, and test the prediction behaviorally. Our results are discrepant with the classical account. Competing theories are also examined in light of our data

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References found in this work

Choices, Values, and Frames.Daniel Kahneman & Amos Tversky (eds.) - 2000 - Cambridge University Press.
Prospect Theory: An Analysis of Decision Under Risk.D. Kahneman & A. Tversky - 1979 - Econometrica: Journal of the Econometric Society:263--291.

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