A key feature of the rank dependent model for decision making under risk is that the weighting of an outcome depends on its relative rank. This theory received numerous axiomatizations, however, all these sets of axioms need to make an explicit reference to the ranking of the outcomes. This...

Rabin proved that a low level of risk aversion with respect to small gambles leads to a high, and absurd, level of risk aversion with respect to large gambles. Rabin's arguments strongly depend on expected utility theory, but we show that similar arguments apply to almost all non-expected...

A reasonable level of risk aversion with respect to small gambles leads to a high, and absurd, level of risk aversion with respect to large gambles. This was demonstrated by Rabin for expected utility theory. Later, Safra and Segal extended this result by showing that similar arguments apply to...

Rabin proved that a low level of risk aversion with respect to small gambles leads to a high, and absurd, level of risk aversion with respect to large gambles. Rabin’s arguments strongly depend on expected utility theory, but we show that similar arguments apply to general non-expected utility...

Rabin proved that a low level of risk aversion with respect to small gambles leads to a high, and absurd, level of risk aversion with respect to large gambles. Rabin's arguments strongly depend on expected utility theory, but we show that similar arguments apply to almost all non-expected...

This note shows that Machina's (1982) assumption that preferences over lotteries are smooth has some economic implications. We show that Frâ„chet differentiability implies that preferences represent second order risk aversion (as well as conditional second order risk aversion). This implies,...

The Becker-DeGroot-Marschak mechanism is widely used to elicit decisionmakers' selling prices of lotteries. This mechanism leads, however, to the preference reversal phenomenon, which seemed to indicate nontransitive preferences. To solve this puzzle, Karni and Safra (1987) introduced a new...