The Distribution Builder: A Tool For Inferring Investor Preferences

Topics:
Decision Analysis
Tags:
Finance,
Financial Accounting,
Financial Services,
Investment,
Investor,
Investor Preference,
Productivity,
Stanford Knowledgebase,
Tool
Source:
Stanford Knowledgebase

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Overview: From the executive summary: ‘Distribution Builder is an interactive tool that can elicit information about an investor’s preferences. The information can be used when making decisions about investment alternatives over time for a particular investor. The approach can also be employed when conducting surveys designed to obtain data on a cross-section of investor preferences. The data can provide insights that can lead to more realistic models of equilibrium in capital markets. The approach asks an investor to choose among alternative probability distributions for end-of-period wealth, where only distributions with similar overall costs are allowed. Importantly, the cost of any distribution is consistent with a model of equilibrium pricing in capital markets.’ The paper briefly explains the benefits of the Distribution Builder for inferring investor preferences.

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Format: HTML | Date: Oct 2000 | Pages: 1


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