Abstract

Decision making comes under pressure when the stakes are high and the information is imperfect. That is risk. Most of the risks can be most easily presented in terms of tensions between the recommendations of a simple theory and the complex reactions. The theory is the standard philosophers' and economists' account of rationality in the face of risk, in terms of expected utility, and the cases derive mostly from the intuitive sense many people have had that there is something wrong with the theory. This chapter aims to give a diagnosis of what underlies these intuitions. It also presents an extreme example bringing out one aspect of risk‐aversion. It further considers a family of related examples which bring out both the force of the EU rule and some of the problems with it. An appeal of EU lies in its connections with the intuitive 'grammar' of risk taking.