On Maurice Allais’ and Ole Hagen’s Expected Utility Hypotheses and the Allais Paradox: Contemporary Discussions of Decisions Under Uncertainty with Allais’ Rejoinder ‘Rational’ Decision Making Versus ‘Rational’ Decision Modelling?

It is hard to think of a more notorious, long-standing, and often outright confused controversy in modern decision theory than the continuing debate on the meaning of ‘rationality’ in choice under uncertainty. Centered around the ‘expected utility’ theory of risk taking first proposed over two centuries ago by mathematician Daniel Bernoulli, this debate has seen the dramatic reversal of Samuelson’s and others‘ opinion of the theory from ’logically arbitrary‘ to ’logically compelling‘, repeated charges and countercharges of ’nonscientific theories‘, ’anti-scientific attitudes‘, and circular definitions of ’rationality‘, the appearance of a major article in the debate with an editorial warning to the reader that it was being published ’on the author’s responsibility‘, and the reaction of Savage who, upon being shown that the preferences he expressed in a survey violated his own ’rationality’ postulate, concluded upon reflection that it was his preferences, and not the postulate, which were in error!