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Parrondo Paradox and Application to the Financial Markets
>> YOUR LINK HERE: ___ http://youtube.com/watch?v=cajg7HTCiBM
Professor Stutzer's research shows the role that misinterpretations of expected returns can play in the seemingly unrelated statistical phenomenon called the Parrondo Paradox; this paradox is described as the possibility that a game being played could have a better chance of losing than winning. • Stutzer showed that individual bets or investments ( which have a better chance of losing), can be turned into diversified portfolios (which have a better chance of winning) especially when following the recommendation to rebalance the portfolio after gains and losses occur. • Learn More: http://leeds.colorado.edu/publication/11
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