Allais paradox in the small

Three small-payoff variants on the famous Allais paradox questions were presented to 202 subjects. For each variant, the probabilities were the sa-me as in the original Allais questions; only the payoffs differed. In one variant, the payoffs were proportional reductions of the original Allais payoffs,. For this variant, for both hypothetical and real payoffs, the Allais paradox behavior largely disappeared in favor of simple expected value maximization. A second variant involved negative payoffs; results were roughly the same. The third variant involved payoffs for which the lotteries had nearly the same expected values. Something closer to Allais paradox behavior was found for this variant when payoffs were real, but not when payoffs were hypothetical. Overall, behavior was closer to simple expected value maximization when payoffs were real than when they were hypothetical. (C) 2002 Elsevier Science B.V. All rights reserved.