Abstract
The expected utility procedure imposes a one-to-one correspondence between sure prospects, outcomes and consequences which unintentionally prevents people from maximising their expected utility and causes them to define risky prospects in a logically contradictory way. This is because the procedure excludes probability dependent consequences. Through the story of Margit,** the paper shows that by including probability dependent consequences, people can realize their intention (according to the expected utility procedure) of maximising their expected utility and can define risky prospects consistently.
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I thank Maurice Allais, Barbara Davidson, Steve Dowrick, Frank Jackson, Werner Leinfellner, Don Poskitt, Guido Rossi, Paul Somuelson. Herbert Simon, Jack Smart, Robert Sugden and Richard Sylvan.
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Pope*, R.E. (1991). Lowered Welfare Under The Expected Utility Procedure. In: Chikán, A. (eds) Progress in Decision, Utility and Risk Theory. Theory and Decision Library, vol 13. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-3146-9_9
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