The Value of Pre-Decision Side Bets for Utility Maximizers

David E. Bell
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David E. Bell: Graduate School of Business Administration, Harvard University, Boston, Massachusetts 02163

Management Science, 1988, vol. 34, issue 6, 797-800

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 (search for similar items in EconPapers)
Date: 1988
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