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: This paper* attempts to analyse whether CEOs are utility maximisers:

Are individuals expected utility maximisers? This question represents much more than academic curiosity. In a normative sense, at stake are the fundamental underpinnings of the bulk of the last half-century’s models of choice under uncertainty. From a positive perspective, the ubiquitous use of benefit-cost analysis across government agencies renders the expected utility maximisation paradigm literally the only game in town. In this study, we advance the literature by exploring CEO’s preferences over small probability, high loss lotteries. Using undergraduate students as our experimental control group, we find that both our CEO and student subject pools exhibit frequent and large departures from expected utility theory. In addition, as the extreme payoffs become more likely, CEOs exhibit greater aversion to risk. Our results suggest that the use of expected utility paradigm in decision-making substantially underestimates society’s willingness to pay to reduce risk in small probability, high loss events.