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Adequate Decision Rules for Portfolio Choice Problems

Adequate Decision Rules for Portfolio Choice Problems

Hardcover

Series: Finance and Capital Markets

EconomicsInvesting & Finance

ISBN10: 0333994329
ISBN13: 9780333994320
Publisher: Springer Nature
Published: Apr 30 2002
Pages: 114
Weight: 0.72
Height: 0.45 Width: 6.08 Depth: 9.72
Language: English
The author presents the theory of portfolio choice from a new perspective, recommending decision rules that have advantages over those currently used in theory and practice. Portfolio choice theory relies on expected values. Goodall argues that this dependence has a historical basis and argues that current decision rules are inadequate for most portfolio choice situations. Drawing on econometric solutions proposed for the problem of forecasting outcomes of a chance experiment, the author defines adequacy criteria, and proposes adequate decision rules for a variety of situations. Goodall's theory combines the problems of prediction and choice, and formulates solutions based on cost functions that fit the underlying decision situation.

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