The Utility of Gambling Reconsidered

B-Tier
Journal: Journal of Risk and Uncertainty
Year: 2004
Volume: 29
Issue: 3
Pages: 241-259

Score contribution per author:

0.670 = (α=2.01 / 3 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

The utility of gambling, which entails an intrinsic utility or disutility of risk, has been alluded to in the economics literature for over a century. This paper demonstrates that any utility of gambling almost unavoidably implies a violation of fundamental rationality properties, such as transitivity or stochastic dominance, for static choices between gambles. This result may explain why the utility of gambling, a phenomenon so widely discussed, has never been formalized in the economics literature. The model of this paper accommodates well-known deviations from expected utility, such as the Allais paradox and the coexistence of gambling and insurance, while minimally deviating from expected utility.

Technical Details

RePEc Handle
repec:kap:jrisku:v:29:y:2004:i:3:p:241-259
Journal Field
Theory
Author Count
3
Added to Database
2026-01-29