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Expected Utility theory is not only applied to individual choices but also to ethical decisions, e.g. in cost-benefit analysis of climate change policy measures that affect future generations. In this context the crucial question arises whether EU theory is able to deal with 'catastrophic risks', i.e. risks of high, but very unlikely losses, in an ethically appealing way. In this paper we show that this is not the case. Rather, if in the framework of EU theory a plausible level of risk aversion is assumed, a 'tyranny of catastrophic risk' (TCR) emerges, i.e. project evaluation may be dominated by the catastrophic event even if its probability is negligibly small. With low degrees of risk aversion, however the catastrophic risk eventually has no impact at all when its probability goes to zero which is ethically not acceptable as well.

It is presented an approach to decision theory based upon nonprobabilistic uncertainty. There is an axiomatization of the hybrid probabilistic possibilistic mixtures based on a pair of triangular conorm and triangular norm satisfying restricted distributivity law, and the corresponding non-additive Smeasure. This is characterized by the families of operations involved in generalized mixtures, based upon a previous result on the characterization of the pair of continuous t-norm and t-conorm such that the former is restrictedly distributive over the latter. The obtained family of mixtures combines probabilistic and idempotent (possibilistic) mixtures via a threshold.

FOLLOWING A DETAILED INTRODUCTION BY THE TRANSLATOR, A PRESENTATION OF MAX WEBER'S TREATISE IS GIVEN. ECONOMIC THEORY, WITH EMPHASIS ON MARGINAL UTILITY ANALYSIS, IS NOT DEPENDENT ON PSYCHOLOGICAL THEOREMS, PRINCIPLES, OR CONCEPTS. RATHER, IT IS VIEWED AS AN ENTERPRISE DEDICATED TO WORKING OUT CONSEQUENCES OF THE ASSUMPTIONS OF ECONOMIC RATIONALITY IN ANALYTICAL TERMS, NOT IN PSYCHOLOGICAL ONES. THE CONCEPT 'OPTIMUM', CANNOT BE REGARDED AS SPECIFICALLY PSYCHOLOGICAL, PSYCHOPHYSICAL, PHYSIOLOGICAL, OR BIOLOGICAL. RATHER, IT IS PARTNER TO VARIOUS PROBLEMS WHICH DIFFER FROM ONE ANOTHER IN SIGNIFICANT WAYS. WHEN VIEWED IN THIS MANNER, IT IS CLEAR THAT THIS CONCEPT DOES NOT MARK OUT MARGINAL UTILITY THEORY. SOME HAVE USED IT AS A SPECIAL CASE TO ILLUSTRATE THE WEBER-FECHNER LAW. AS THE WEBER-FECHNER LAW PROVIDES THE THEORETICAL BASIS FOR MARGINAL UTILITY THEORY, IT CANNOT BE SEEN AS INCLUSIVE OF THE CONCEPT OF OPTIMUM. 'OPTIMUM' HAS CERTAIN ASPECTS IN COMMON WITH THE PHYSIOLOGICAL & PSYCHOLOGICAL APPROACH & MAY HAVE PEDAGOGICAL VALUE BUT CANNOT BE RESTRICTED TO THE WEBER-FECHNER LAW. B. WEISBROD.

"In the development of the mental sciences exegesis has frequently played an important part. A change of doctrine has been justified, or supported, or commended for general acceptance, by the interpretation of an authoritative text."W. J. Ashley (1895, p. 474)."We must … try to avoid an outlook narrowly constrained by the marginalist principles of 1871."Samuel Hollander (1973, p. 138).

Using actual probabilities of audit and penalty rates, the return on evasion is 91–98%. So why do not most of us evade? Existing analysis, based on expected utility theory (EUT) is unable to explain this. Furthermore, and contrary to intuition and the bulk of evidence, EUT predicts that evasion should be decreasing in the tax rate (Yitzhaki puzzle). We apply Tversky and Kahneman's [Tversky, A., Kahneman, D., 1992. Advances in prospect theory: cumulative representation of uncertainty. Journal of Risk and Uncertainty 5, 297–323] cumulative prospect theory to tax evasion. We show that prospect theory provides a much more satisfactory account of tax evasion including an explanation of the Yitzhaki puzzle. This also provides independent confirmation of prospect theory.