An Allais Paradox Without Mental Time Trave

Posted: 11 Oct 2017

See all articles by Sacha Bourgeois-Gironde

Sacha Bourgeois-Gironde

École Normale Supérieure (ENS); Université Paris II

Date Written: October 10, 2014

Abstract

The capacity to anticipate future experiences of regret has been hypothesized to explain otherwise irrational aspects of human decision-making, including the certainty effect (Kahneman and Tversky (1979) Econometrica 47:263–291) and the common ratio effect (Allais (1953) Econometrica 21:503–546). The anticipated regret hypothesis predicts that individuals incapable of episodically imagining their personal futures, as has been reported for people with extensive damage to medial temporal lobe structures and resulting deficits in episodic thought, should be immune to these effects. We report that K.C., who has extensive bilateral damage to his hippocampus and adjacent medial temporal lobe structures and nearly complete deficits in his ability to episodically imagine his personal future, nonetheless displays both the certainty and the common ratio effects. These results suggest that the episodic anticipation of future regret does not explain the general human tendency to display the certainty and common ratio effects.

Keywords: Allais Paradox, Independence Axiom, Mental Time Travel, KC Patient

JEL Classification: D87, D91

Suggested Citation

Bourgeois-Gironde, Sacha, An Allais Paradox Without Mental Time Trave (October 10, 2014). Available at SSRN: https://ssrn.com/abstract=3050709

Sacha Bourgeois-Gironde (Contact Author)

École Normale Supérieure (ENS) ( email )

45 rue d’Ulm
Paris Cedex 05, F-75230
France

Université Paris II ( email )

12 place du Pantheon
Paris cedex 06, 75231
France

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