Widgetized – Allais Paradox

Maurice Allais was awarded the 1998 Nobel Prize in economic science:

“Outside of the economics profession Allais is perhaps best known for his studies of decision-making under risk and what is generally known as the Allais paradox. He used this paradox to show that the theory of maximization of expected utility developed by John von Neumann and Oscar Morgenstern, which had been accepted by economists for more than forty years, is contradicted by empirical observations of human behaviour in some important decisions under risk. On the basis of these observations, Allais formulated a more general theory.”