An expected utility based cost-benefit analysis is in general fragile to its distributional assumptions. We derive … necessary and sufficient conditions on the utility function of the expected utility model to avoid this. The conditions ensure … that expected (marginal) utility remains finite also under heavy-tailed distributional assumptions. Our results are context …

summarized in a so-called "Prospect Theory". These biases are quite obvious if one compares data of affected and unaffected … people. But this theory offers, as well, a way to get results more accurate. …