Risk: The long and the short.

Key Points

• To address and rebut challenges against the normative adequacy of expected utility theory in short-run decision making, while offering a new normative and psychological analysis of Samuelson's classic gambling problem.
• Theoretical critique evaluating arguments raised against the normative validity of expected utility theory in short-run scenarios.
• Mathematical and psychological re-analysis of Samuelson's gambling dilemma and the fallacy of large numbers.
• Rebuts core claims that expected utility theory is inadequate for modeling short-run risk preferences.
• Formulates a revised normative model combined with psychological insights to explain decision behaviors across single and repeated gambles.