The Unattractiveness of Hedges: Implications For the Conception of Risk Preferences

Shane Frederick, Yale University, USA
Andrew Meyer, Yale University, USA
Amanda Levis, Yale University, USA
Those who own a $10 HEADS voucher value a $10 TAILS voucher less than $5. This contradicts the risk aversion implied by their valuation of the HEADS voucher (which is also below $5). This logical error is difficult to expunge and it challenges essentially every existing model of risk attitudes.
[ to cite ]:
Shane Frederick, Andrew Meyer, and Amanda Levis (2015) ,"The Unattractiveness of Hedges: Implications For the Conception of Risk Preferences", in NA - Advances in Consumer Research Volume 43, eds. Kristin Diehl and Carolyn Yoon, Duluth, MN : Association for Consumer Research, Pages: 132-135.