3 ms·
Not for smoothing variance, as you don't care about positive veriations. You'd buy it to limit your downside. If people would buy it to minimize variance, they
by ucaetano 11y ago
Not for smoothing variance, as you don't care about positive veriations. You'd buy it to limit your downside.
If people would buy it to minimize variance, they would also pay an insurance against winning the lottery.
- msandford 11y agoSome people choose to take 20 years of monthly payments from lottery winning rather than one lump sum. "Rationally" anyone who does that is a fool, and yet people constantly do that. Perhaps there's value to variance minimization, aside from the non-linear utility function of money?