Analysis reveals that rank-dependent theories and fanning-out indifference curves explain the zero effect, suggesting limits of standard expected utility models.
This article examines whether rank-dependent theories and the theory of fanning-out indifference curves explain the Allais common consequence effect. A choice pattern consistent with all these theories is the zero effect (aversion to zero outcomes). This pattern entirely accounts for the incremental explanatory power over expected utility of all the theories we test.
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Incekara‐Hafalir et al. (2025) studied this question.
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