8a8e and 5765 are right. b00e has no idea what he's talking about.
Risk aversion, concave utility, Andrew Gelman

Rabin makes a very good point: that EUT cannot account for risk aversion over small gambles otherwise it implies absurd levels of risk aversion. But all I'm saying is that his point relies on a implausible assumption: you need to turn down the same (fair) gamble over and over as you get wealthier.

I'm obviously late to this, but it's funny to read that Andrew Gelman was "late to the party", when  indeed  he proved Rabin's callibration two years before Rabin: http://www.stat.columbia.edu/~gelman/research/published/bayesdemos.pdf
Read more here: http://andrewgelman.com/2005/04/19/loss_aversion_e/

Gelman proved Rabin's theorem in a much more simple and elegant way two years before Rabin. He did not think it was a big deal and it was published in a paper on classroom demonstrations. As Gelman's prove illustrates, the phenomenon applies to pure gains, not just mixed gambles like Rabin assumes. Rabin and Thaler give 11 examples  all involve mixed gambles (5050 win 11/lose 10) even though a DM who always rejects a 5050 win 11/lose 10 gamble will always prefer 10 to a 5050 chance of winning 11.
The fact that the Gelman/Rabin theorem applies to gains as well as losses means that the theorem doesn't provide evidence for loss aversion. While Gelman's theorem is general, Rabin and Thaler are very specific  a DM who ALwAYS rejects a 5050 win 11/lose 10 gamble will always reject a 5050 win infinity/lose 100 example. It turns out that the formula implicitly used by Rabin and Thaler (A DM who always rejects a 5050 win G/lose L gamble will always reject a 5050 win infinity/lose Lprime gamble, where Lprime =(L^2)/(WL) is false.
It's taken me a dozen years to unravel the confusion of Rabin's theorem  Gelman's paper helped a lot.
I've created a blog summarizing the confusion about Rabin's theorem. It comes up high on the list if you google "Rabin and Thaler 2001"P.S. I'm Deb.

Correction;
all involve mixed gambles (5050 win 11/lose 10) even though a DM who always rejects a 5050 win 11/lose 10 gamble will always prefer 10 to a 5050 chance of winning 21 [NOT 11 AS I MISTYPED].
I am just so stoked that Gelman's paper is being discussed here. My bad.

This thread represents an important milestone for EJMR: the first genuinely respectful interaction with an anonymous female poster.
Perhaps this site isn't doomed afterall.Google Deb Frisch or visit debfrisch.com, then guess how long that will last.
PS  Check out a2e4 in this thread:
http://www.econjobrumors.com/topic/isbehavioraleconomicsdoomed 
That's a site dedicated to stalking Dr. Frisch maintained by Kirk I. Hays, a computer programmer in Portland.
http://www.manta.com/c/mtbz4c5/haysferronassociatesincorporated
He is assisted by Jeff Goldstein and his wife, Helen Hunt of Denver, CO who have a pending lawsuit against Dr. Frisch in El Paso, CO court filed by Paul F. Lewis, a lawyer who has harassed Dr. Frisch repeatedly in a futile attempt to extort money for Jeff and Helen by falsely alleging she wanted to murder and/or kiss their three year old son.http://www.schmitzlewis.com/index.php?page=paullewis#.U8yP5vldUR4

I'm obviously late to this, but it's funny to read that Andrew Gelman was "late to the party", when  indeed  he proved Rabin's callibration two years before Rabin: http://www.stat.columbia.edu/~gelman/research/published/bayesdemos.pdf
Read more here: http://andrewgelman.com/2005/04/19/loss_aversion_e/Some other people in economics had discovered special cases of the theorem of Rabin before hand as well. I haven't gone through Gelman's piece here. How general is it?

Some other people in economics had discovered special cases of the theorem of Rabin before hand as well. I haven't gone through Gelman's piece here. How general is it?
Not general at all. He gives an example of CARA utility, and suggests that it would always hold for CARA utility

That's a site dedicated to stalking Dr. Frisch maintained by Kirk I. Hays, a computer programmer in Portland.
http://www.manta.com/c/mtbz4c5/haysferronassociatesincorporated
He is assisted by Jeff Goldstein and his wife, Helen Hunt of Denver, CO who have a pending lawsuit against Dr. Frisch in El Paso, CO court filed by Paul F. Lewis, a lawyer who has harassed Dr. Frisch repeatedly in a futile attempt to extort money for Jeff and Helen by falsely alleging she wanted to murder and/or kiss their three year old son.
http://www.schmitzlewis.com/index.php?page=paullewis#.U8yP5vldUR4Oh my god, Kirk has been outed here as well!!