Financial derivatives have often been compared to instrumentsof gambling . It turns out that many naive ways of making them do indeed lead to behavior which is mathematically equivalent to gambling. Fortunately, this inadvertent effect can be understood and prevented. We present a theory of product design which allows us to do that.
Financial derivatives have often been criticized as casino-style betting instruments . It turns out that many naive ways of making them are indeed equivalent to gambling. Fortunately, this inadvertent effect can be understood and prevented. We present a theory of product design which achieves that.
R
compared to instrumentsof gambling
criticized as casino-style betting instruments
R
do indeed lead to behavior which is mathematically
are indeed
R
allows us to do
achieves