Consider the Allais paradox described on pageĀ allais-page: an agent
who prefers $B$ over $A$ (taking the sure thing), and $C$ over $D$
(taking the higher EMV) is not acting rationally, according to utility
theory. Do you think this indicates a problem for the agent, a problem
for the theory, or no problem at all? Explain.
Consider the Allais paradox described on pageĀ allais-page: an agent who prefers $B$ over $A$ (taking the sure thing), and $C$ over $D$ (taking the higher EMV) is not acting rationally, according to utility theory. Do you think this indicates a problem for the agent, a problem for the theory, or no problem at all? Explain.