The Value of Pre-Decision Side Bets for Utility Maximizers
Management Science · 1988 · Volume 34 · Issue 6
Abstract
If an alternative is attractive only at certain wealth levels of a decision maker, typically above some critical level, then there will be occasions when it is better to enter into an independent side bet prior to making a decision, than to accept or reject the alternative outright.
Keywords
decision analysis, options, risk aversion
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