Comments to the Editor on “The Willingness to Pay for Diversification”

Aleksi Pitkäjärvi; Matteo Vacca

doi:10.1287/mnsc.2023.01581

Comments to the Editor on “The Willingness to Pay for Diversification”

Aleksi Pitkäjärvi^*
, Matteo Vacca

^*Corresponding author for this work

Research output: Contribution to Journal › Comment / Letter to the editor › Academic

Abstract

Mahmoud [Mahmoud O (2022) The willingness to pay for diversification. Management Sci. 68(8):6235–6249] presents experimental evidence showing that people have an intrinsic preference for diversification that is driven by risk aversion and loss aversion, with risk-averse and loss-averse individuals being more willing to pay for diversification. We document numerous discrepancies between the results reported in the paper and the results calculated from the experimental data. In particular, the data show that risk-averse individuals are actually less willing to pay for diversification, whereas the effect of loss aversion is nonmonotonic and not statistically significant. We thus show that the data do not support the paper’s claim of a preference for diversification driven by risk aversion and loss aversion.

Original language	English
Pages (from-to)	4825-4827
Number of pages	3
Journal	Management Science
Volume	71
Issue number	6
DOIs	https://doi.org/10.1287/mnsc.2023.01581
Publication status	Published - Jun 2025

Bibliographical note

Publisher Copyright:
© 2024 INFORMS.

Funding

History:Accepted by Tomasz Piskorski, finance. Funding:The authors gratefully acknowledge financial support from the OP Group Research Founda-tion [Grants 20220057 and 20220089]. Supplemental Material:The online appendix and data files are available at https:/ /doi.org/10.1287/mnsc. 2023.01581. The authors gratefully acknowledge financial support from the OP Group Research Foundation [Grants 20220057 and 20220089]. This paper grew out of an assignment in the Management Science Reproducibility Project (Fišar et al. 2024) and would not have been possible without the Management Science Policy for Data and Code Disclosure.

Funders	Funder number
OP Group Research Founda-tion	20220089, 20220057
OP Group Research Foundation	2024

Keywords

diversification
experimental economics
loss aversion
risk aversion

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10.1287/mnsc.2023.01581

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Cite this

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title = "Comments to the Editor on “The Willingness to Pay for Diversification”",

abstract = "Mahmoud [Mahmoud O (2022) The willingness to pay for diversification. Management Sci. 68(8):6235–6249] presents experimental evidence showing that people have an intrinsic preference for diversification that is driven by risk aversion and loss aversion, with risk-averse and loss-averse individuals being more willing to pay for diversification. We document numerous discrepancies between the results reported in the paper and the results calculated from the experimental data. In particular, the data show that risk-averse individuals are actually less willing to pay for diversification, whereas the effect of loss aversion is nonmonotonic and not statistically significant. We thus show that the data do not support the paper{\textquoteright}s claim of a preference for diversification driven by risk aversion and loss aversion.",

keywords = "diversification, experimental economics, loss aversion, risk aversion",

author = "Aleksi Pitk{\"a}j{\"a}rvi and Matteo Vacca",

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year = "2025",

month = jun,

doi = "10.1287/mnsc.2023.01581",

language = "English",

volume = "71",

pages = "4825--4827",

journal = "Management Science",

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AU - Pitkäjärvi, Aleksi

AU - Vacca, Matteo

PY - 2025/6

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N2 - Mahmoud [Mahmoud O (2022) The willingness to pay for diversification. Management Sci. 68(8):6235–6249] presents experimental evidence showing that people have an intrinsic preference for diversification that is driven by risk aversion and loss aversion, with risk-averse and loss-averse individuals being more willing to pay for diversification. We document numerous discrepancies between the results reported in the paper and the results calculated from the experimental data. In particular, the data show that risk-averse individuals are actually less willing to pay for diversification, whereas the effect of loss aversion is nonmonotonic and not statistically significant. We thus show that the data do not support the paper’s claim of a preference for diversification driven by risk aversion and loss aversion.

AB - Mahmoud [Mahmoud O (2022) The willingness to pay for diversification. Management Sci. 68(8):6235–6249] presents experimental evidence showing that people have an intrinsic preference for diversification that is driven by risk aversion and loss aversion, with risk-averse and loss-averse individuals being more willing to pay for diversification. We document numerous discrepancies between the results reported in the paper and the results calculated from the experimental data. In particular, the data show that risk-averse individuals are actually less willing to pay for diversification, whereas the effect of loss aversion is nonmonotonic and not statistically significant. We thus show that the data do not support the paper’s claim of a preference for diversification driven by risk aversion and loss aversion.

KW - diversification

KW - experimental economics

KW - loss aversion

KW - risk aversion

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DO - 10.1287/mnsc.2023.01581

M3 - Comment / Letter to the editor

AN - SCOPUS:105007424434

SN - 0025-1909

VL - 71

SP - 4825

EP - 4827

JO - Management Science

JF - Management Science

IS - 6

ER -

Comments to the Editor on “The Willingness to Pay for Diversification”

Abstract

Bibliographical note

Funding

Keywords

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