Rabin's calibration theorem

In microeconomics and decision theory, Rabin's calibration theorem (also known as Rabin's paradox or Rabin's critique) is a theoretical result related to the calibration of risk aversion within expected-utility theory. In intuitive terms, it shows that an expected-utility-maximizer who is moderately risk averse over small-stake gambles must show implausibly high risk aversion over high stakes.

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