Rabin's paper challenges the expected-utility theory's ability to explain risk aversion over modest stakes. The paper presents a calibration theorem showing that if an individual is risk-averse over small stakes, they must also be extremely risk-averse over large stakes, which is unrealistic. The theorem is nonparametric, assuming only that the utility function is concave. It demonstrates that rejecting small-stakes gambles implies rejecting large-stakes gambles with extreme risk aversion. For example, if someone rejects a 50-50 bet of losing $100 and gaining $110, they would also reject a 50-50 bet of losing $1,000 and gaining any amount. This implies that the marginal utility of money diminishes very quickly, which is unrealistic. The paper argues that expected-utility theory is not a good model for modest-scale risk aversion and that alternative models, such as loss aversion, provide a better explanation. The paper also discusses the implications of the theorem for experimental economics and investment decisions, showing that expected-utility theory can lead to misleading conclusions. The paper concludes that while expected-utility theory is useful for large-scale risk, it is not suitable for explaining modest-scale risk aversion.Rabin's paper challenges the expected-utility theory's ability to explain risk aversion over modest stakes. The paper presents a calibration theorem showing that if an individual is risk-averse over small stakes, they must also be extremely risk-averse over large stakes, which is unrealistic. The theorem is nonparametric, assuming only that the utility function is concave. It demonstrates that rejecting small-stakes gambles implies rejecting large-stakes gambles with extreme risk aversion. For example, if someone rejects a 50-50 bet of losing $100 and gaining $110, they would also reject a 50-50 bet of losing $1,000 and gaining any amount. This implies that the marginal utility of money diminishes very quickly, which is unrealistic. The paper argues that expected-utility theory is not a good model for modest-scale risk aversion and that alternative models, such as loss aversion, provide a better explanation. The paper also discusses the implications of the theorem for experimental economics and investment decisions, showing that expected-utility theory can lead to misleading conclusions. The paper concludes that while expected-utility theory is useful for large-scale risk, it is not suitable for explaining modest-scale risk aversion.