This note addresses 3 issues that seem to pervade much of economic thought about individual decisions among uncertain alternatives: (1) Restricting primitives to just orderings of first-order gambles and not admitting, e.g., compound acts or joint receipt of consequences and gambles. (2) Great resistance to experimental findings that strongly suggest that most current theories fail descriptively. (3) Taking for granted the innocence of some assumptions when, in fact, they are not innocent, e.g., that constant acts are idempotent. My conclusion is (...) that these restrictions have greatly inhibited developments in utility theory. (shrink)

This paper argues that any specific utility or disutility for gambling must be excluded from expected utility because such a theory is consequential while a pleasure or displeasure for gambling is a matter of process, not of consequences. A (dis)utility for gambling is modeled as a process utility which monotonically combines with expected utility restricted to consequences. This allows for a process (dis)utility for gambling to be revealed. As an illustration, the model shows how empirical observations in the Allais paradox (...) can reveal a process disutility of gambling. A more general model of rational behavior combining processes and consequences is then proposed and discussed. (shrink)

From the viewpoint of the independence axiom of expected utility theory, an interesting empirical dynamic choice problem involves the presence of a “global risk,” that is, a chance of losing everything whichever safe or risky option is chosen. In this experimental study, participants have to allocate real money between a safe and a risky project. Treatment variable is the particular decision stage at which a global risk is resolved: (i) before the investment decision; (ii) after the investment decision, but before (...) the resolution of the decision risk; (iii) after the resolution of the decision risk. The baseline treatment is without global risk. Our goal is to investigate the isolation effect and the principle of timing independence under the different timing options of the global risk. In addition, we examine the role played by anticipated and experienced emotions in the choice problem. Main findings are a violation of the isolation effect, and support for the principle of timing independence. Although behavior across the different global risk cases shows similarities, we observe clear differences in people’s affective responses. This may be responsible for the conflicting results observed in earlier experiments. Dependent on the timing of the global risk different combinations of anticipated and experienced emotions influence decision making. (shrink)