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A Process Approach to the Utility for Gambling

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Author Info
Marc Le Menestrel ()
Abstract

This paper argues that any specific utility or disutility for gambling must be excluded from expected utility because such a theory is consequential while a pleasure or displeasure for gambling is a matter of process, not of consequences. A (dis)utility for gambling is modeled as a process utility which monotonically combines with expected utility restricted to consequences. This allows for a process (dis)utility for gambling to be revealed. As an illustration, the model shows how empirical observations in the Allais paradox can reveal a process disutility of gambling. A more general model of rational behavior combining processes and consequences is then proposed and discussed.

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Publisher Info
Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 570.

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Date of creation: Sep 2001
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Handle: RePEc:upf:upfgen:570

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Related research
Keywords: Gambling; expected utility; process utility; rationality; irrationality; consequentialism;

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Find related papers by JEL classification:
D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Sen, Amartya, 1995. "Rationality and Social Choice," American Economic Review, American Economic Association, vol. 85(1), pages 1-24, March.
  2. Fishburn, Peter C, 1989. " Retrospective on the Utility Theory of von Neumann and Morgenstern," Journal of Risk and Uncertainty, Springer, vol. 2(2), pages 127-57, June.
  3. Amartya Sen, 1997. "Maximization and the Act of Choice," Econometrica, Econometric Society, vol. 65(4), pages 745-780, July.
    Other versions:
  4. Bruno S. Frey & Alois Stutzer, . "Happiness, Economy and Institutions," IEW - Working Papers iewwp015, Institute for Empirical Research in Economics - IEW. [Downloadable!]
    Other versions:
  5. Conlisk, John, 1993. " The Utility of Gambling," Journal of Risk and Uncertainty, Springer, vol. 6(3), pages 255-75, June.
  6. Hammond, P.J. & , ., 1987. "Consequentialist foundations for expected utility," CORE Discussion Papers 1987016, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  7. Diecidue, E. & Schmidt, U. & Wakker, P.P., 2000. "A theory of the gambling effect," Discussion Paper 75, Tilburg University, Center for Economic Research. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Bruno S. Frey & Alois Stutzer, . "Beyond Outcomes: Measuring Procedural Utility," IEW - Working Papers iewwp076, Institute for Empirical Research in Economics - IEW. [Downloadable!]
    Other versions:
  2. Marc Le Menestrel & Luk N. Van Wassenhove, 2001. "The Domain and Interpretation of Utility Functions: An Exploration," Economics Working Papers 576, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
  3. Bruno Frey & Matthias Benz, 2003. "Being Independent is a Great Thing: Subjective Evaluations of Self-Employment and Hierarchy," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  4. Bruno Frey & Alois Stutzer, 2001. "Beyond Bentham -- Measuring Procedural Utility," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  5. Marc Le Menestrel & Bertrand Lemaire, 2002. "Additive Utility with Intransitive Indifference and without Independence: A Homogeneous Case," Economics Working Papers 628, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
  6. Marc Le Menestrel & Luk Van Wassenhove, 2001. "The Domain and Interpretation of Utility Functions: An Exploration," Theory and Decision, Springer, vol. 51(2), pages 329-349, December. [Downloadable!] (restricted)
  7. R. Luce & C. Ng & A. Marley & János Aczél, 2008. "Utility of gambling I: entropy modified linear weighted utility," Economic Theory, Springer, vol. 36(1), pages 1-33, July. [Downloadable!] (restricted)
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