Quantum Interpretation to Decision Making Under Risk: The Observer Effect In Allais Paradox

Abstract

As it has served as a basement for all sciences; Newtonian Physics has served for economics as well. Consequently Newtonian causality appeared as economic determinism in economic theory. Recently quantum physics called into question the philosophy of determinism and focused on possibility rather than certainty. Decision making under risk and uncertainty has been reviewed by scientists from different disciplines. Since it is revealed that individual behavior contradicts with the basic tenets of the theory; economists, psychologists, neurologists and physicists have devoted much to better understand the basic motives underlying irrational behavior. This study adapts quantum approach to decision making under risk considering Allais Paradox and reinterprets it not from the side of the subject but from the side of the observer. In this way it is aimed to reconsider Allais Paradox referring to quantum measurement problem and the observer effect.