Options Traders Exhibit Subadditive Decision Weights
Professional options traders priced risky prospects as well as uncertain prospects whose outcomes depended on future values of various stocks. The prices of the risky prospects coincided with their expected value, but the prices of the uncertain prospects violated expected utility theory. An event h...
Saved in:
| Published in | Journal of risk and uncertainty Vol. 13; no. 1; pp. 5 - 17 |
|---|---|
| Main Authors | , , |
| Format | Journal Article |
| Language | English |
| Published |
Kluwer Academic Publishers
01.07.1996
|
| Subjects | |
| Online Access | Get full text |
Cover
Loading…
| Abstract | Professional options traders priced risky prospects as well as uncertain prospects whose outcomes depended on future values of various stocks. The prices of the risky prospects coincided with their expected value, but the prices of the uncertain prospects violated expected utility theory. An event had greater impact on prices when it turned an impossibility into a possibility or a possibility into a certainty than when it merely made a possibility more or less likely, as predicted by prospect theory. This phenomenon is attributed to the subadditivity of judged probabilities. |
|---|---|
| AbstractList | Professional options traders priced risky prospects as well as uncertain prospects whose outcomes depended on future values of various stocks. The prices of the risky prospects coincided with their expected value, but the prices of the uncertain prospects violated expected utility theory. An event had greater impact on prices when it turned an impossibility into a possibility or a possibility into a certainty than when it merely made a possibility more or less likely, as predicted by prospect theory. This phenomenon is attributed to the subadditivity of judged probabilities. |
| Author | FOX, CRAIG R. TVERSKY, AMOS ROGERS, BRETT A. |
| Author_xml | – sequence: 1 givenname: CRAIG R. surname: FOX fullname: FOX, CRAIG R. – sequence: 2 givenname: BRETT A. surname: ROGERS fullname: ROGERS, BRETT A. – sequence: 3 givenname: AMOS surname: TVERSKY fullname: TVERSKY, AMOS |
| BookMark | eNpF0E1LAzEQBuAgFWzVi3dhTx6E1UkmX3vU2qpQ6MGCxyXZZm1Ku1uTVPTfG6noYZjLwzvDOyKDru8cIRcUbiiAur2fAoAQiOKIDKlQWAJXckCGoCtRCsnlCRnFuM6q0loPCZ_vku-7WCyCWboQi8nnylufipe9NculT_7DFQ-u8TGr4tX5t1WKZ-S4NZvozn_3KVlMJ4vxUzmbPz6P72Zlg1qlUlgqjQFkHARqRCsYSostupYxraRmMj-LlRBMNEZhHmuskoAIEi2ekqtD7C7073sXU731sXGbjelcv481VkC54izD6wNsQh9jcG29C35rwldNof7ppf7vJePLA17H1Ic_yWk-rKnEb3-WXc8 |
| CitedBy_id | crossref_primary_10_1287_mnsc_1110_1429 crossref_primary_10_2139_ssrn_3118395 crossref_primary_10_1016_j_jmateco_2008_12_001 crossref_primary_10_1016_j_jebo_2013_10_008 crossref_primary_10_1080_15427560_2022_2100377 crossref_primary_10_1007_s11238_010_9202_y crossref_primary_10_1016_j_euroecorev_2005_08_001 crossref_primary_10_1038_nclimate3208 crossref_primary_10_1037_1076_898X_11_4_277 crossref_primary_10_1080_13669877_2014_1003319 crossref_primary_10_2139_ssrn_344600 crossref_primary_10_1006_cogp_1998_0706 crossref_primary_10_1016_j_insmatheco_2005_09_004 crossref_primary_10_1016_j_rfe_2009_11_001 crossref_primary_10_1016_j_jebo_2012_12_022 crossref_primary_10_2139_ssrn_4147815 crossref_primary_10_1111_j_1467_8586_2010_00380_x crossref_primary_10_3389_fpsyg_2023_1157527 crossref_primary_10_1287_mnsc_45_1_74 crossref_primary_10_1016_j_jeconbus_2006_04_002 crossref_primary_10_1006_cogp_1998_0710 crossref_primary_10_1111_padm_12710 crossref_primary_10_1006_cogp_1998_0711 crossref_primary_10_3390_g10040036 crossref_primary_10_2139_ssrn_2293508 crossref_primary_10_1177_0959354312468221 crossref_primary_10_1287_trsc_1060_0158 crossref_primary_10_2139_ssrn_244663 crossref_primary_10_1007_s11238_005_8633_3 crossref_primary_10_1146_annurev_psych_49_1_447 crossref_primary_10_2139_ssrn_244668 crossref_primary_10_2139_ssrn_2536610 crossref_primary_10_1002_smj_374 crossref_primary_10_3390_e11041073 crossref_primary_10_1007_s11023_015_9367_9 crossref_primary_10_2139_ssrn_3040649 crossref_primary_10_1007_s11238_007_9051_5 crossref_primary_10_1016_S0022_2496_02_00017_2 crossref_primary_10_2139_ssrn_1717015 crossref_primary_10_1007_s11166_007_9011_z crossref_primary_10_1111_j_1467_999X_2005_00219_x crossref_primary_10_1016_j_geb_2024_03_015 crossref_primary_10_1016_j_jet_2015_12_008 crossref_primary_10_1016_S1058_3300_97_90008_2 crossref_primary_10_2139_ssrn_2293733 crossref_primary_10_1002_bdm_1924 crossref_primary_10_1007_s11229_017_1628_0 crossref_primary_10_1007_s11166_009_9062_4 crossref_primary_10_1002_bdm_1929 crossref_primary_10_1002_bdm_477 crossref_primary_10_1057_s10713_022_00074_x crossref_primary_10_1016_j_jmateco_2021_102543 crossref_primary_10_1002_bdm_629 crossref_primary_10_1037_0278_7393_30_3_573 crossref_primary_10_1111_1467_9280_02431 crossref_primary_10_3141_1894_23 crossref_primary_10_1287_mnsc_1050_0388 crossref_primary_10_1007_s12297_007_0002_6 crossref_primary_10_1017_S1930297500002990 crossref_primary_10_1080_16066359_2017_1287901 crossref_primary_10_2139_ssrn_489042 crossref_primary_10_2139_ssrn_2515703 crossref_primary_10_1016_j_jmp_2012_02_003 crossref_primary_10_1287_orsc_2014_0946 crossref_primary_10_1016_S0165_4896_01_00084_1 crossref_primary_10_2139_ssrn_237279 crossref_primary_10_2139_ssrn_557863 crossref_primary_10_2139_ssrn_1507697 crossref_primary_10_1007_s11238_013_9377_0 crossref_primary_10_1093_wber_lhaa016 crossref_primary_10_2139_ssrn_2763959 crossref_primary_10_1037_0033_295X_111_1_236 crossref_primary_10_2139_ssrn_3325564 crossref_primary_10_1016_j_jmp_2009_04_007 crossref_primary_10_1016_j_jmp_2007_04_001 crossref_primary_10_1287_mnsc_44_7_879 crossref_primary_10_1287_mnsc_47_12_1712_10239 crossref_primary_10_1007_s10683_024_09825_1 crossref_primary_10_1080_00036840410001674286 crossref_primary_10_3917_reco_604_0949 crossref_primary_10_1287_deca_1080_0113 crossref_primary_10_1287_mnsc_2020_3890 crossref_primary_10_1002_bdm_1794 crossref_primary_10_1146_annurev_economics_080511_110950 crossref_primary_10_1002_sres_2290 crossref_primary_10_2139_ssrn_929916 crossref_primary_10_1002_fut_21989 crossref_primary_10_1016_j_intman_2009_01_001 crossref_primary_10_2139_ssrn_3135225 crossref_primary_10_2139_ssrn_3845870 crossref_primary_10_2308_accr_2005_80_3_871 crossref_primary_10_1080_15472450490523856 crossref_primary_10_1002__SICI_1099_0771_199906_12_2_141__AID_BDM312_3_0_CO_2_C crossref_primary_10_1287_mnsc_1070_0790 crossref_primary_10_2139_ssrn_4185107 crossref_primary_10_3390_math9070739 crossref_primary_10_2139_ssrn_2691397 crossref_primary_10_1093_poq_nft083 crossref_primary_10_1007_s11166_017_9268_9 crossref_primary_10_1287_mnsc_2017_2777 crossref_primary_10_1257_aer_101_2_695 crossref_primary_10_2469_faj_v54_n5_2212 crossref_primary_10_2139_ssrn_2049425 crossref_primary_10_1017_S1930297500006628 crossref_primary_10_1080_15427560_2017_1376330 crossref_primary_10_2139_ssrn_1101380 crossref_primary_10_1287_mnsc_1100_1282 crossref_primary_10_2139_ssrn_3121358 crossref_primary_10_1007_s11238_010_9193_8 crossref_primary_10_7202_016696ar crossref_primary_10_1016_j_jhealeco_2003_11_004 crossref_primary_10_2139_ssrn_3164204 crossref_primary_10_1007_s13164_015_0282_z |
| Cites_doi | 10.1002/bs.3830090304 10.1007/BF01065812 10.1016/0167-2681(82)90008-7 10.1037/0033-295X.101.4.547 10.2307/1914185 10.1007/BF00122574 10.2307/2171769 10.2307/1911158 10.1037/0033-295X.102.2.269 10.1007/BF00057885 10.1016/0304-4068(89)90002-5 10.2307/1911053 10.1016/0304-4068(87)90022-X |
| ContentType | Journal Article |
| DBID | AAYXX CITATION 8BJ FQK JBE |
| DOI | 10.1007/BF00055335 |
| DatabaseName | CrossRef International Bibliography of the Social Sciences (IBSS) International Bibliography of the Social Sciences International Bibliography of the Social Sciences |
| DatabaseTitle | CrossRef International Bibliography of the Social Sciences (IBSS) |
| DatabaseTitleList | |
| DeliveryMethod | fulltext_linktorsrc |
| Discipline | Economics Statistics Psychology |
| EISSN | 1573-0476 |
| EndPage | 17 |
| ExternalDocumentID | 10_1007_BF00055335 41760816 |
| GroupedDBID | -4X -57 -5G -BR -~C -~X .86 .VR 06D 0R~ 199 1N0 1SB 2.D 203 28- 29L 2JN 2JY 2KM 2VQ 30V 4.4 40D 5GY 5QI 5VS 63O 67Z 6NX 78A 7WY 8FL 8UJ 8VB 95. 95~ 96X A.0 AAAVM AABYN AAFGU AAHNG AAIAL AAMGN ABBBX ABBHK ABECU ABFGW ABFOO ABGEI ABIVO ABJNI ABJOX ABKAS ABKHF ABKTR ABKVW ABLJU ABMNI ABMQK ABNWP ABSXP ABXSQ ABYYQ ACBMV ACBRV ACBXY ACBYP ACGFS ACHQT ACHXU ACIGE ACIPQ ACSNA ACTTH ACVWB ACWMK ACYUM ADGDI ADIMF ADKPE ADMDM ADOXG ADQAN ADULT AEEQQ AEFIE AEFTE AEKMD AEQOZ AESTI AEUPB AEVTX AFEXP AFFNX AFLOW AFMWI AFNRJ AGGBP AGGDS AHAJD AHKAY AIMYW AITGF AJDOV AJZVZ AKQUC AKVCP ALMA_UNASSIGNED_HOLDINGS ALWAN AMKLP ARMRJ ASPBG AVWKF AXYYD AYQZM AZFZN B-. BAPOH BBWZM BDATZ CAG CBXGM COF CPTUE CS3 CSCUP CWXUR DCOAJ DL5 DU5 EBO EBS EBU EDH EIS EJD EOH ESBYG F5P FEDTE FFXSO FIGPU FIL FINBP FNLPD FRRFC FSGXE FWDCC GGCAI GGRSB GJIRD GQ6 GQ7 GQ8 GROUPED_ABI_INFORM_COMPLETE GXS HG5 HG6 HMJXF HRMNR HVGLF HZ~ I09 ITM IXC IZIGR I~X I~Z J-C J0Z JAAYA JBSCW JCJTX JENOY JHFFW JKQEH JLEZI JLXEF JPL JPPEU JSODD JST K1G K60 K6~ KOW M4Y MA- MVM N2Q N9A NB0 NDZJH NU0 O-J O9- O93 O9G O9I P19 P2P P9M PF0 PT4 PT5 QOK QOS QWB R-Y R4E R89 R9I RHV RNI ROL RPX RSV RZK S26 S27 S28 S3B SA0 SAP SBE SCF SCLPG SDH SDM SISQX SNPRN SOHCF SOJ SRMVM STPWE SZN T13 T16 TH9 TN5 TSG TSK TSV U2A VC2 W23 W48 WH7 YQT Z45 Z7S Z7X Z81 Z83 Z88 Z8N Z8R Z8U Z8W ZL0 ZMTXR ZYFGU ~8M ~EX ~KM -EM -Y2 0-V 0VY 2J2 2KG 2LR 2P1 2~H 3V. 406 408 409 40E 8AO 8FI 8FJ 8TC 95- AABHQ AACDK AAEOY AAJBT AAJKR AANZL AARHV AARTL AASML AATNV AATVU AAUYE AAWCG AAYIU AAYQN AAYTO AAYXX ABAKF ABBXA ABDZT ABFTV ABHLI ABHQN ABKCH ABQBU ABTEG ABTHY ABTKH ABTMW ABULA ABUWG ABWNU ABXPI ACAOD ACDTI ACHSB ACKNC ACMDZ ACMLO ACOKC ACOMO ACZOJ ADACV ADBBV ADHHG ADHIR ADINQ ADKNI ADRFC ADTPH ADURQ ADYFF ADZKW AEBTG AEFQL AEGAL AEGNC AEJHL AEJRE AEMSY AEOHA AEPYU AESKC AETLH AEVLU AEXYK AFBBN AFGCZ AFKRA AFQWF AFWTZ AFZKB AGAYW AGDGC AGJBK AGMZJ AGQEE AGQMX AGRTI AGWIL AGWZB AGYKE AHAVH AHBYD AHSBF AHYZX AIAKS AIGIU AIIXL AILAN AJBLW AJRNO ALIPV ALSLI AMXSW AMYLF AMYQR AOCGG ARALO AZQEC BA0 BENPR BEZIV BGNMA BGRYB BPHCQ BVXVI CCPQU CITATION DDRTE DNIVK DPUIP DWQXO EBLON EIOEI FERAY FRNLG FYUFA GNUQQ GNWQR GROUPED_ABI_INFORM_RESEARCH H13 HF~ HQYDN IHE IJ- IKXTQ IPSME IWAJR IZQ JZLTJ KDC KOV LAK LLZTM M0C M0O M2M NPVJJ NQJWS OAM OVD PQBIZ PQBZA PQQKQ PROAC PSYQQ Q2X RNS RZC RZD S16 S1Z SHX SJYHP SNE SNX SPISZ SSLCW TEORI TUC UG4 UKHRP UOJIU UTJUX UZXMN VFIZW WK8 YLTOR 8BJ AAYZH ADXGJ ALEOT APTMU FQK JBE |
| ID | FETCH-LOGICAL-c387t-5b16aa0324053833b5236b3f3ef22876826005395525ca73ca7bab76033063b3 |
| ISSN | 0895-5646 |
| IngestDate | Sat Oct 26 00:47:53 EDT 2024 Thu Sep 26 17:03:41 EDT 2024 Fri Feb 02 07:02:40 EST 2024 |
| IsPeerReviewed | true |
| IsScholarly | true |
| Issue | 1 |
| Language | English |
| LinkModel | OpenURL |
| MergedId | FETCHMERGED-LOGICAL-c387t-5b16aa0324053833b5236b3f3ef22876826005395525ca73ca7bab76033063b3 |
| Notes | ObjectType-Article-2 SourceType-Scholarly Journals-1 ObjectType-Feature-1 content type line 23 |
| PQID | 39014742 |
| PQPubID | 23473 |
| PageCount | 13 |
| ParticipantIDs | proquest_miscellaneous_39014742 crossref_primary_10_1007_BF00055335 jstor_primary_41760816 |
| PublicationCentury | 1900 |
| PublicationDate | 1996-07-01 |
| PublicationDateYYYYMMDD | 1996-07-01 |
| PublicationDate_xml | – month: 07 year: 1996 text: 1996-07-01 day: 01 |
| PublicationDecade | 1990 |
| PublicationTitle | Journal of risk and uncertainty |
| PublicationYear | 1996 |
| Publisher | Kluwer Academic Publishers |
| Publisher_xml | – name: Kluwer Academic Publishers |
| References | Menachem E. Yaari (CR15) 1987; 55 Itzhak Gilboa (CR3) 1987; 16 R. Duncan Luce (CR5) 1991; 4 Peter Wakker (CR13) 1993; 7 Amos Tversky (CR11) 1995; 63 Gordon M. Becker (CR1) 1964; 9 Amos Tversky (CR10) 1994; 101 CR14 Amos Tversky (CR9) 1992; 5 Peter Wakker (CR12) 1989; 18 Daniel Kahneman (CR4) 1979; 47 John Quiggin (CR6) 1982; 3 Colin Camerer (CR2) 1995 David Schmeidler (CR7) 1989; 57 Amos Tversky (CR8) 1995; 102 |
| References_xml | – volume: 9 start-page: 226 year: 1964 ident: CR1 publication-title: Behavioral Science doi: 10.1002/bs.3830090304 contributor: fullname: Gordon M. Becker – volume: 7 start-page: 147 year: 1993 ident: CR13 publication-title: Journal of Risk and Uncertainty doi: 10.1007/BF01065812 contributor: fullname: Peter Wakker – volume: 3 start-page: 323 year: 1982 ident: CR6 publication-title: Journal of Economic Behavior and Organization doi: 10.1016/0167-2681(82)90008-7 contributor: fullname: John Quiggin – volume: 101 start-page: 547 year: 1994 ident: CR10 publication-title: Psychological Review doi: 10.1037/0033-295X.101.4.547 contributor: fullname: Amos Tversky – volume: 47 start-page: 263 year: 1979 ident: CR4 publication-title: Econometrica doi: 10.2307/1914185 contributor: fullname: Daniel Kahneman – volume: 5 start-page: 297 year: 1992 ident: CR9 publication-title: Journal of Risk and Uncertainty doi: 10.1007/BF00122574 contributor: fullname: Amos Tversky – ident: CR14 – volume: 63 start-page: 1255 year: 1995 ident: CR11 publication-title: Econometrica doi: 10.2307/2171769 contributor: fullname: Amos Tversky – volume: 55 start-page: 95 year: 1987 ident: CR15 publication-title: Econometrica doi: 10.2307/1911158 contributor: fullname: Menachem E. Yaari – volume: 102 start-page: 269 year: 1995 ident: CR8 publication-title: Psychological Review doi: 10.1037/0033-295X.102.2.269 contributor: fullname: Amos Tversky – start-page: 587 volume-title: Handbook of Experimental Economics year: 1995 ident: CR2 contributor: fullname: Colin Camerer – volume: 4 start-page: 29 year: 1991 ident: CR5 publication-title: Journal of Risk and Uncertainty doi: 10.1007/BF00057885 contributor: fullname: R. Duncan Luce – volume: 18 start-page: 1 year: 1989 ident: CR12 publication-title: Journal of Mathematical Economics doi: 10.1016/0304-4068(89)90002-5 contributor: fullname: Peter Wakker – volume: 57 start-page: 571 year: 1989 ident: CR7 publication-title: Econometrica doi: 10.2307/1911053 contributor: fullname: David Schmeidler – volume: 16 start-page: 65 year: 1987 ident: CR3 publication-title: Journal of Mathematical Economics doi: 10.1016/0304-4068(87)90022-X contributor: fullname: Itzhak Gilboa |
| SSID | ssj0009888 |
| Score | 1.7861092 |
| Snippet | Professional options traders priced risky prospects as well as uncertain prospects whose outcomes depended on future values of various stocks. The prices of... |
| SourceID | proquest crossref jstor |
| SourceType | Aggregation Database Publisher |
| StartPage | 5 |
| SubjectTerms | Decision making Economic behaviour Economic uncertainty Expected utility Expected values Options on stocks Prospect theory Risk Selling price Staffing Statistical median Stock exchange Stock exchanges Uncertainty Utility models Weighting functions |
| Title | Options Traders Exhibit Subadditive Decision Weights |
| URI | https://www.jstor.org/stable/41760816 https://search.proquest.com/docview/39014742 |
| Volume | 13 |
| hasFullText | 1 |
| inHoldings | 1 |
| isFullTextHit | |
| isPrint | |
| link | http://utb.summon.serialssolutions.com/2.0.0/link/0/eLvHCXMwnV1LT8JAEN4oHvRiFCXis4nempLS2W3LEQjGmKiJgcQb2S3FeBAMlBj89c50ty0PTdAQGiiUhv0m89pvZhi7Iac0aITKUS54Do8xQFHoNTvRkEdCDQGkT9XID4_-XY_fv4iXYsZmWl2SqFr09WNdyX9QxXOIK1XJ_gHZ_EfxBL5GfPGICONxI4yfNCOF5jwQH9mOadr1W2JPZ4p4QikraGCG6NifaRJ0-os3mlLMKYmOdk6zBJL5ioVqT-Tbq_1cK_ZoXs2AtRaxfe1m_kmXuB46Kdt8Hy9kFjQZOcgyC0YBNYQjfJMijI2CDMBxuZ7ZkmtQWJMUrQ7Fgl3VJZprGtvNeOjUDQxAFHYp24tfMVc5iTBruFxcu812PNQ3pOg6rV7RezlMx4_mf2e5S625dskv0dTUNfOc-hzdA7Zv4LGaGvlDthWPymw3qyWfltlebr_m-IYCB913-4hxIxuWkQ3LyIa1IBtWJhuWkY1j1r3tdNt3jpmQ4UQQBokjVN2X0qWmimi4AJTwwFcwhHjoYSjshzR-QEBDCE9EMgB8KqkC3wWMFEFBhZVG41F8wiyXKylCicF65PJBAx-uCAdSUtvigKuoyq6z5el_6D4o_XUAqqySrlz-FV7Hm4V1v8qusqXso_6iTSk5isezaZ9ybjzg3ulGNzhje4WknrNSMpnFF-gVJuoyxfwbxH5eDA |
| link.rule.ids | 315,783,787,27936,27937 |
| linkProvider | EBSCOhost |
| openUrl | ctx_ver=Z39.88-2004&ctx_enc=info%3Aofi%2Fenc%3AUTF-8&rfr_id=info%3Asid%2Fsummon.serialssolutions.com&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=article&rft.atitle=Options+traders+exhibit+subadditive+decision+weights&rft.jtitle=Journal+of+risk+and+uncertainty&rft.au=Fox%2C+Craig+R.&rft.au=Rogers%2C+Brett+A.&rft.au=Tversky%2C+Amos&rft.date=1996-07-01&rft.issn=0895-5646&rft.eissn=1573-0476&rft.volume=13&rft.issue=1&rft.spage=5&rft.epage=17&rft_id=info:doi/10.1007%2FBF00055335&rft.externalDBID=n%2Fa&rft.externalDocID=10_1007_BF00055335 |
| thumbnail_l | http://covers-cdn.summon.serialssolutions.com/index.aspx?isbn=/lc.gif&issn=0895-5646&client=summon |
| thumbnail_m | http://covers-cdn.summon.serialssolutions.com/index.aspx?isbn=/mc.gif&issn=0895-5646&client=summon |
| thumbnail_s | http://covers-cdn.summon.serialssolutions.com/index.aspx?isbn=/sc.gif&issn=0895-5646&client=summon |