An Alternative Theory of Hedging and Speculation
(1978) , 33 pages
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- Abstract
- This paper develops an alternative non-maximizing approach to individual speculator decision-making. The economic agent is seen to determine his market position by equating his estimate of the probability of loss with his willingness to take risk expressed as a function of market commitments. This alternative approach is applied to speculative buying and selling in commodity futures, and to carrying charge and selective hedgers, although it may be applicable to other speculative activities. Two specific forms of expectations function are used, and comparison is made between the non-maximizing approach and two expected utility models regarding changes in current price, expectations, etc.
- Affiliations
Citations
Goss, B. A. (1978). An Alternative Theory of Hedging and Speculation (Working Papers Institut des sciences économiques 7808). https://hdl.handle.net/2078.5/278753