
John Quiggin
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12.3.1 The Allais Problem
Almost as soon as it was introduced, EU theory came under attack, most notably from a
(defiantly) French economist, Maurice Allais. Isolated from developments in the United
States by World War II and by his insistence on publishing in French, Allais undertook
extensive work on decision theory independently of von Neumann and Morgenstern, and
had developed his own theory of cardinal utility
4
. On this basis, he argued that rational deci-
sion makers would be concerned about the dispersion of utility, as well as its mean value.
This view led Allais to reject the axioms of von Neumann and Morgenstern. Although ...