The Utility of Wealth in an Upper and Lower Partial Moment Fabric

Forthcoming, Journal of Investing 2011

Posted: 28 Jan 2010 Last revised: 7 Sep 2010

See all articles by Fred Viole

Fred Viole

OVVO Financial Systems; Fordham University

David N. Nawrocki

Villanova University - Department of Finance

Date Written: January 27, 2010

Abstract

Utility should be a function consisting of two autonomous sections both positive and negative, that needs to be configurable to the individuals it is designed to represent. This is achieved through the target by which individuals measure their investments against as well as their individual interpretations of target variances. Historical utility functions tend to generalize these distinctions in order to apply them to a broader scope of the population and project a descriptive theory. Instead of the observed fitting the function, we have the function fit the observed in an effort to combine descriptive and normative techniques.

Keywords: Utility, Loss Aversion, Gain Seeking, Lower Partial Moment, Upper Partial Moment, Singularity, Specification Error

JEL Classification: D1

Suggested Citation

Viole, Fred and Nawrocki, David N., The Utility of Wealth in an Upper and Lower Partial Moment Fabric (January 27, 2010). Forthcoming, Journal of Investing 2011, Available at SSRN: https://ssrn.com/abstract=1543603

Fred Viole (Contact Author)

OVVO Financial Systems ( email )

NJ
United States

Fordham University ( email )

Bronx, NY 10458
United States

David N. Nawrocki

Villanova University - Department of Finance ( email )

800 Lancaster Avenue
Villanova, PA 19085-1678
United States
610-519-4323 (Phone)
610-519-6881 (Fax)

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