We review experimental evidence collected from risky choice experiments using poor subjects in Ethiopia, India and Uganda. Using these data we estimate that just over 50% of our sample behaves in accordance with expected utility theory and that the rest subjectively weight probability according to prospect theory. Our results show that inferences about risk aversion are robust to whichever model we adopt when we estimate each model separately. However, when we allow both models to explain portions of the data simultaneously, we infer risk aversion for subjects behaving according to expected utility theory and risk-seeking behaviour for subjects behaving according to prospect theory. Copyright � The Author(s). Journal compilation � Royal Economic Society 2009.

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Recent studies have examined possible causes of the robust empirical failure of the transitivity axiom of expected utility theory by pitting regret aversion against alternative explanations such as event-splitting effects. These tests show that cycles replicate when the latter are controlled, but are sensitive to changes in problem representation. The control for eventsplitting effects, however, does not rule out their contribution to cyclical choices in some circumstances. An experiment is reported which investigates this possibility. Cyclical choices are observed that cannot be due to event-splitting effects, but appear attributable to withinevent and between-act evaluations of decision problems plus framing effects.

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