To read more about the behaviorial finance study read initial vpFree
post by thymos_one
I immediately thought of 3 life scenarios that would
make your "clearly. . . most advantageous" statement
clearly wrong! Then I stopped thinking about such a
trivial problem.
It does seem to follow that if disbelieve statistical theory you
might also disbelieve financial theory of net present value. Good
luck with your scenarios!
Is Jim Thompson another Rob Singer alias?
>
> The study was done in two parts. First people were
> allowed to choose how their earnings were to be distributed
> to them
>
> 1. yr1=50,000; yr2=$100,000; yr2=$150,000
> 2. yr1=yr2=yr3=$100,000
> 3. yr1=$150,000; yr2=$100,000; yr3=$50,000
>
> Now clearly option 3 is the most advantageous
>
With positive interest rates NPV of option 3 is clearly best.
> Now here's the real kicker, part two of the study.
> Participants were told how they could put their income in asavings account and earn interest during the 3 year period. In
other words it was explained how option 3 was clearly the best
choice. Even under this test scenario option 1 was preferred
thymos_one
Casino Comps
New Group Dedicated to Tracking Casino Comps
http://groups.yahoo.com/group/casino_comps/
ยทยทยท
--- In vpFREE@yahoogroups.com, jim thompson <meldrone@y...> wrote: