Huck, S.; Muller, W.; (2007) Allais for all: revisiting the paradox. (ELSE Working Papers 289). ESRC Centre for Economic Learning and Social Evolution: London, UK.

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Abstract

We administer the Allais paradox questions to, both, a representative sample of the Dutch population and to student subjects. Three treatments are implemented: one with the original high hypothetical payoffs, one with low hypothetical payoffs and a third with low real payoffs. Our key findings are-(i) a large bulk of violations stems from non-familiarity with large payoffs; (ii) we can identify groups of the general population that have much more difficulty to make consistent decisions and may, hence, be much more prone to making imprudent financial choices; this concerns mainly the lowly educated and unemployed; and (iii) the shares of violations of standard theory observed in the lab provide lower bounds for the shares of violations observed in the population at large.

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