Latest / Behavioral Economics with Fexingo: Decision Making, Bias, and How People Really Spend
The Allais Paradox and Why We Fear Big Risks
In this episode, Lucas and Luna dive into the Allais Paradox, a famous challenge to expected utility theory that shows how people consistently make 'irrational' choices when probabilities get extreme. Using the classic 1950s Maurice Allais experiment plus a modern twist from a 2026 insurance study, they explain why we overpay to eliminate small risks and underweight high-probability outcomes. The hosts connect this to real-world decisions: from choosing health insurance plans to why a 1 percent chance of disaster feels the same as a 5 percent chance. Lucas walks through the math of…
The skinny
The skinny isn't ready yet — notes appear once the transcript is processed.