Abstract
If you are a Friedman-Savage gambler,1 who is willing to buy an Irish Sweepstake ticket, it follows immediately that your willingness to share the ticket equally with partners will decline with increases in the number of partners until you finally refuse to buy your share, and it also follows that you will then be unwilling to buy any smaller share. This is illustrated in Fig. 1.
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Notes
National Association of Mutual Savings Banks, Mutual Savings Banking, a monograph prepared for the Commission on Money and Credit (Englewood Cliffs, N.J.: Prentice-Hall Inc., 1962), p. 54.
Donald Hester, ‘An Empirical Examination of a Commercial Bank Loan Offer Function’, Yale Economic Essays, vol. 2, no. 1 (Spring 1962), pp. 1–57.
Markowitz, H. M., Portfolio Selection: Efficient Diversification of Investments, New York: John Wiley & Sons, 1959.
United States Treasury Department, Individual Income Tax Returns, Washington: United States Government Printing Office, 1962, various pages.
For another study in which rewards for bearing risks are estimated, see Hester, Donald, and Zoellner, John F., ‘The Relation between Bank Portfolios and Earnings: an Econometric Analysis’, Review of Economics and Statistics, vol. xlviii (1966), pp. 372–86.
Hester, Donald, Indian Banks: Their Portfolios, Profits, and Policy, Bombay: Bombay Univ. Press, 1964.
An alternative theoretical approach, which seems to have wide scope, is to formulate an earnings maximization model, subject to chance-constraints. See A. Charnes and S. Thore, ‘Planning for Liquidity in Financial Institutions: the Chance-Constrained Method’, Journal of Finance, Sept. 1966.
Cf. Meyer, J. R., and Kuh, E., The Investment Decision, Cambridge, Mass. Harvard Univ. Press, 1957, Appendix C.
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Rosett, R.N. (1968). Measuring the Perception of Risk. In: Borch, K., Mossin, J. (eds) Risk and Uncertainty. International Economic Association Conference Volumes, Numbers 1–50. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-15248-3_3
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