- The Allais Paradox involves the choice between two alternatives
A. 89% chance of an unknown amount
10% chance of $1 million 1% chance of $1 million
B. 89% chance of an unknown amount (the same amount as in A)
10% chance of $2.5 million 1% chance of nothing
What is the rational choice? Does this choice remain the same if the unknown amount is $1 million? If it is nothing?