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Old 12-19-2005, 12:48 AM
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Default Re: Is Game Theory Applicable Here?

Right. I agree with what you're saying. And I agree that people ought to closely examine why they are deviating from maximizing EV. I just find it moderately distressing when some economists point to the Allais paradox as an example of people behaving incorrectly simply because it deviates from our theories of what they ought to do. I think it was a good thing for you to bring up the Allais paradox so that people are careful when they think about these issues, I just wanted to provide a different perspective that preference reversals aren't necessarily wrong, just incosistent with our theories.
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