The author presents the theory of portfolio choice from a new perspective, recommending decision rules that have advantages over those currently used in theory and practice. Portfolio choice theory relies on expected values. Goodall argues that this dependence has a historical basis and argues that current decision rules are inadequate for most portfolio choice situations. Drawing on econometric solutions proposed for the problem of forecasting outcomes of a chance experiment, the author defines adequacy criteria, and proposes adequate decision rules for a variety of situations. Goodall's theory combines the problems of prediction and choice, and formulates solutions based on cost functions that fit the underlying decision situation.

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About the author

THILO GOODALL holds a PhD from the University of Freiburg (Germany) and is currently with SAM Sustainable Asset Management in Switzerland.

Bibliographic Information

Book Title: Adequate Decision Rules for Portfolio Choice Problems
Authors: Thilo Goodall
Series Title: Finance and Capital Markets Series
DOI: https://doi.org/10.1057/9781403907318
Publisher: Palgrave Macmillan London
eBook Packages: Palgrave Economics & Finance Collection, Economics and Finance (R0)
Copyright Information: Palgrave Macmillan, a division of Macmillan Publishers Limited 2002
Hardcover ISBN: 978-0-333-99432-0Published: 30 April 2002
Softcover ISBN: 978-1-349-43234-9Published: 01 January 2002
eBook ISBN: 978-1-4039-0731-8Published: 17 December 2015
Series ISSN: 2946-2010
Series E-ISSN: 2946-2029
Edition Number: 1
Number of Pages: XIII, 114
Topics: Capital Markets, Business Finance, Investments and Securities, Industries, Economics, general

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Table of contents (5 chapters)

Front Matter

Introduction

Risk and Decision

Analysis of Prominent Decision Rules

Adequate Decision Rules for Portfolio Choice

Conclusions

Back Matter

About this book