theories, rank dependent utility (RDU) and cumulative prospect theory (CP) incorporate (i) but not (ii). By contrast, prospect … stochastically dominated options. This, we believe, provides the best available alternative among decision theories of risk at the … Becker paradox and the St. Petersburg paradox. -- Decision making under risk ; Composite Prelec probability weighting …

This paper studies bilateral risk-sharing with no aggregate uncertainty, when agents maximize rank-dependent utilities …. We characterize the structure of Pareto optimal risk-sharing contracts in full generality. We then derive a necessary and … the two agents, and not on their (concave) utility functions …