Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/301934 
Authors: 
Year of Publication: 
2024
Series/Report no.: 
UCD Centre for Economic Research Working Paper Series No. WP24/13
Publisher: 
University College Dublin, UCD School of Economics, Dublin
Abstract: 
Samuelson (1963) conjectured that accepting multiple independent gambles you would reject on a stand-alone basis violated expected utility theory. Ross (1999) and others presented examples where expected utility maximizers would accept multiple gambles that would be rejected on a stand-alone basis once the number of gambles gets large enough. We show that a stronger result than Samuelson's conjecture applies for DARA preferences over wealth. Expected utility maximizers with DARA preferences have threshold levels of wealth such that those above the threshold will accept N positive expected value gambles while those below will not and these thresholds are increasing with N.
Subjects: 
Risk aversion
Paul Samuelson
Law of large numbers
JEL: 
D81
Document Type: 
Working Paper

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