Options Traders Exhibit Subadditive Decision Weights

• Published in: Journal of risk and uncertainty Vol. 13; no. 1; pp. 5 - 17
• Main Authors: FOX, CRAIG R., ROGERS, BRETT A., TVERSKY, AMOS
• Format: Journal Article
• Language: English
• Published: Kluwer Academic Publishers 01.07.1996
• Subjects: 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

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...