Diversification is a fundamental concept in economics, decision theory and finance. It also lies at the core of the Darwinian evolution argument, and diversifying behavior known as bet-hedging has been widely documented in other species. The central premise of this paper is that attitudes...

Diversification is a fundamental concept in economics, finance, and decision theory. This paper argues that decision makers assign an intrinsic value to the notion of diversification and that this “willingness to pay” is driven by risk aversion and loss aversion. In an experimental study...

Abstract. This paper introduces a new model for decision making under ambiguity in the context of asset allocation called second-order uncertainty. I propose a quantification of uncertainty without ranking or evaluation of possible outcomes. Faced with a collection of choice alternatives, the...