Decisions under unpredictable losses: An examination of the restated diversification principle
Journal Title: Judgment and Decision Making - Year 2007, Vol 2, Issue 5
Abstract
An experimental test of the descriptive adequacy of the restated diversification principle is presented. The principle postulates that risk-averse utility maximizers will pool risks for their mutual benefit, even if information is missing about the probabilities of losses. It is enough for people to assume that they face equal risks when they pool risks. The results of the experiment support the principle.
Authors and Affiliations
Ali Ahmed
Keywords
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