The purpose of this paper is to study the notion of consistency of choice independent of the particular choice model at hand. Consistency is viewed as an inherently logical concept that is fundamentally void of connotation and is thus disentangled from traditional rationality or consistency...

We present evidence that sustainability is inextricably linked with market-implied uncertainty and sentiment. We derive an econometric decomposition of sustainability ratings yielding three orthogonal components capturing uncertainty, investor sentiment, and an idiosyncratic sustainability...

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...

The principle of indifference states that events should be assigned equal probabilities if no reason can be given for regarding one event as more likely than another. This paper provides a normative argument for the principle of indifference based on a new formal model of decision under...

A widely applied diversification paradigm is the naive diversification choice heuristic. It stipulates that an economic agent allocates equal decision weights to given choice alternatives independent of their individual characteristics. This article provides mathematically and economically sound...

Diversification represents the idea of choosing variety over uniformity. Within the theory of choice, desirability of diversification is axiomatized as preference for a convex combination of choices that are equivalently ranked. This corresponds to the notion of risk aversion when one assumes...