Theories of practical rationality have usually taken it for granted that given a choice, people will prefer a maximum of expected utility. The Allais' paradox states that there are many situations in which perfectly reasonable people do not prefer a maximum of expected utility. What is the neurocognitive process behind selecting an Allais' preference? What does Allais' preference appeal to in an Aristotelian paradigm?

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    Kahneman and Tversky suggest in Prospect Theory that people first "edit" offered prospects to simplify the decision making, and then evaluate the simplifications. As a result, the values of outcomes are multiplied by weights that overweigh small probabilities and underweigh large ones but under what they call "subcertainty", "an essential element of people's attitudes to uncertain events, namely that the sum of the weights associated with complementary events is typically less than the weight associated with the certain event".
    – Conifold
    Commented Dec 16, 2020 at 23:23
  • Shouldn't a rational human being weigh just the values of the outcome? After all the value of weights just results in a bias which makes us commit errors in greed. And the fact is certainty is a much better prospect to hold on to as against the prize which is uncertain.
    – user43163
    Commented Dec 17, 2020 at 5:48
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    Human resources are limited, so it is rational to be irrational when the cost of rationality is high. And even when it is not "otherwise rational" people can be systematically irrational anyway. Kahneman and Tversky got the Nobel prize for showing that evolution reduced the computational effort by wiring rule of thumb heuristics into our brains. They work well enough in some areas, but notoriously badly in probability and statistics. And they are the source of multiple cognitive biases that we can not help but manifest. Humans are rational animals, meaning animals too.
    – Conifold
    Commented Dec 17, 2020 at 7:07


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