Valuing bets and hedges: Implications for the construct of risk preference
Risk attitudes implied by valuations of risk-increasing assets depart markedly from those implied by valuations of risk-reducing assets. For instance, many are unwilling to pay the expected value for a risky asset or for its perfect hedge. Although nearly every theory of risk preference (and logic)...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
| Published: |
Cambridge University Press
2018-11-01
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| Series: | Judgment and Decision Making |
| Subjects: | |
| Online Access: | https://www.cambridge.org/core/product/identifier/S1930297500006549/type/journal_article |
| _version_ | 1797697924054908928 |
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| author | Shane Frederick Amanda Levis Steven Malliaris Andrew Meyer |
| author_facet | Shane Frederick Amanda Levis Steven Malliaris Andrew Meyer |
| author_sort | Shane Frederick |
| collection | DOAJ |
| description | Risk attitudes implied by valuations of risk-increasing assets depart markedly from those implied by valuations of risk-reducing assets. For instance, many are unwilling to pay the expected value for a risky asset or for its perfect hedge. Although nearly every theory of risk preference (and logic) demands a negative correlation between valuations of bets and hedges, we observe positive correlations. This inconsistency is difficult to expunge. |
| first_indexed | 2024-03-12T03:46:55Z |
| format | Article |
| id | doaj.art-cb963e639e664454ba7c56b2fb0165d1 |
| institution | Directory Open Access Journal |
| issn | 1930-2975 |
| language | English |
| last_indexed | 2024-03-12T03:46:55Z |
| publishDate | 2018-11-01 |
| publisher | Cambridge University Press |
| record_format | Article |
| series | Judgment and Decision Making |
| spelling | doaj.art-cb963e639e664454ba7c56b2fb0165d12023-09-03T12:43:28ZengCambridge University PressJudgment and Decision Making1930-29752018-11-011350150810.1017/S1930297500006549Valuing bets and hedges: Implications for the construct of risk preferenceShane Frederick0Amanda Levis1Steven Malliaris2Andrew Meyer3Department of Marketing, Yale University, New Haven, CTDepartment of Marketing, Yale University, New Haven, CTDepartment of Finance, University of Georgia, Athens, GACenter for Decision Research, University of ChicagoRisk attitudes implied by valuations of risk-increasing assets depart markedly from those implied by valuations of risk-reducing assets. For instance, many are unwilling to pay the expected value for a risky asset or for its perfect hedge. Although nearly every theory of risk preference (and logic) demands a negative correlation between valuations of bets and hedges, we observe positive correlations. This inconsistency is difficult to expunge.https://www.cambridge.org/core/product/identifier/S1930297500006549/type/journal_articlebetshedgesrisk attitude |
| spellingShingle | Shane Frederick Amanda Levis Steven Malliaris Andrew Meyer Valuing bets and hedges: Implications for the construct of risk preference Judgment and Decision Making bets hedges risk attitude |
| title | Valuing bets and hedges: Implications for the construct of risk preference |
| title_full | Valuing bets and hedges: Implications for the construct of risk preference |
| title_fullStr | Valuing bets and hedges: Implications for the construct of risk preference |
| title_full_unstemmed | Valuing bets and hedges: Implications for the construct of risk preference |
| title_short | Valuing bets and hedges: Implications for the construct of risk preference |
| title_sort | valuing bets and hedges implications for the construct of risk preference |
| topic | bets hedges risk attitude |
| url | https://www.cambridge.org/core/product/identifier/S1930297500006549/type/journal_article |
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