High-stakes hedges are misunderstood too. A commentary on: “Valuing bets and hedges: Implications for the construct of risk preference”
Frederick, Levis, Malliaris & Meyer (2018) report a package of laboratory studies where participants underestimate the value of “hedges”: Risky bets which cancel out the risk of another presently-held bet. However, it might be questioned to what extent laboratory findings predict field behavior....
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Cambridge University Press
2019-09-01
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| Series: | Judgment and Decision Making |
| Subjects: | |
| Online Access: | https://www.cambridge.org/core/product/identifier/S1930297500004897/type/journal_article |
| _version_ | 1827831575258071040 |
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| author | Philip W. S. Newall Dominic Cortis |
| author_facet | Philip W. S. Newall Dominic Cortis |
| author_sort | Philip W. S. Newall |
| collection | DOAJ |
| description | Frederick, Levis, Malliaris & Meyer (2018) report a package of laboratory studies where participants underestimate the value of “hedges”: Risky bets which cancel out the risk of another presently-held bet. However, it might be questioned to what extent laboratory findings predict field behavior. People might better understand hedges when more money is at stake, or when they have more time to reflect. We discuss three gamblers who, instead of hedging, used a costly “cash-out” option to eliminate the risk of their bets on Leicester FC’s improbable victory in the 2015/2016 English Premier League soccer season. The decision to cash-out rather than to hedge led to individual losses of up to £8,000, and did not seem plausibly explained by rational economic factors. High-stakes hedges are misunderstood too. |
| first_indexed | 2024-03-12T04:51:30Z |
| format | Article |
| id | doaj.art-0c95fd31fcb84457b15c1b8e862c7ecf |
| institution | Directory Open Access Journal |
| issn | 1930-2975 |
| language | English |
| last_indexed | 2024-03-12T04:51:30Z |
| publishDate | 2019-09-01 |
| publisher | Cambridge University Press |
| record_format | Article |
| series | Judgment and Decision Making |
| spelling | doaj.art-0c95fd31fcb84457b15c1b8e862c7ecf2023-09-03T09:20:27ZengCambridge University PressJudgment and Decision Making1930-29752019-09-011460560710.1017/S1930297500004897High-stakes hedges are misunderstood too. A commentary on: “Valuing bets and hedges: Implications for the construct of risk preference”Philip W. S. Newall0Dominic Cortis1University of WarwickUniversity of MaltaFrederick, Levis, Malliaris & Meyer (2018) report a package of laboratory studies where participants underestimate the value of “hedges”: Risky bets which cancel out the risk of another presently-held bet. However, it might be questioned to what extent laboratory findings predict field behavior. People might better understand hedges when more money is at stake, or when they have more time to reflect. We discuss three gamblers who, instead of hedging, used a costly “cash-out” option to eliminate the risk of their bets on Leicester FC’s improbable victory in the 2015/2016 English Premier League soccer season. The decision to cash-out rather than to hedge led to individual losses of up to £8,000, and did not seem plausibly explained by rational economic factors. High-stakes hedges are misunderstood too.https://www.cambridge.org/core/product/identifier/S1930297500004897/type/journal_articlegamblingsports bettinghedgingcash-outsoccer |
| spellingShingle | Philip W. S. Newall Dominic Cortis High-stakes hedges are misunderstood too. A commentary on: “Valuing bets and hedges: Implications for the construct of risk preference” Judgment and Decision Making gambling sports betting hedging cash-out soccer |
| title | High-stakes hedges are misunderstood too. A commentary on: “Valuing bets and hedges: Implications for the construct of risk preference” |
| title_full | High-stakes hedges are misunderstood too. A commentary on: “Valuing bets and hedges: Implications for the construct of risk preference” |
| title_fullStr | High-stakes hedges are misunderstood too. A commentary on: “Valuing bets and hedges: Implications for the construct of risk preference” |
| title_full_unstemmed | High-stakes hedges are misunderstood too. A commentary on: “Valuing bets and hedges: Implications for the construct of risk preference” |
| title_short | High-stakes hedges are misunderstood too. A commentary on: “Valuing bets and hedges: Implications for the construct of risk preference” |
| title_sort | high stakes hedges are misunderstood too a commentary on valuing bets and hedges implications for the construct of risk preference |
| topic | gambling sports betting hedging cash-out soccer |
| url | https://www.cambridge.org/core/product/identifier/S1930297500004897/type/journal_article |
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