In finance, indifference pricing is a method of pricing financial securities with regard to a utility function. The indifference price is also known as the reservation price or private valuation. In particular, the indifference price is the price at which an agent would have the same expected utility level by exercising a financial transaction as by not doing so (with optimal trading otherwise). Typically the indifference price is a pricing range (a bid–ask spread) for a specific agent; this price range is an example of good-deal bounds.[1]
^John R. Birge (2008). Financial Engineering. Elsevier. pp. 521–524. ISBN 978-0-444-51781-4.
and 22 Related for: Indifference price information
In finance, indifferencepricing is a method of pricing financial securities with regard to a utility function. The indifferenceprice is also known as...
In economics, an indifference curve connects points on a graph representing different quantities of two goods, points between which a consumer is indifferent...
they would sell. Similarly, in finance, the reservation price—also called the indifferenceprice—is the value at which an investor would be willing to buy...
common tangent to two indifference curves. An equilibrium therefore corresponds to a budget line which is also a price line, and the price at equilibrium is...
perfect complement is a good that must be consumed with another good. The indifference curve of a perfect complement exhibits a right angle, as illustrated...
preferred than the bundles "on" indifference curve 1. The income effect and price effect explain how the change in price of a good changes the consumption...
A relative price is the price of a commodity such as a good or service in terms of another; i.e., the ratio of two prices. A relative price may be expressed...
consumer obtaining the same utility level for all the points on the indifference curve (utility function). Let a consumption bundle be represented by...
outcomes ("states") correspondingly, Y s {\displaystyle Y_{s}} . See indifferenceprice. (Some investors may in fact be risk seeking as opposed to risk averse...
Tail value at risk Statistical dispersion Discounted maximum loss Indifferenceprice Measures Dual-beta Downside beta Upside beta Upside potential ratio...
people consume more of as the price rises and vice versa, violating the law of demand. For ordinary goods, as the price of the good rises, the substitution...
A shadow price is the monetary value assigned to an abstract or intangible commodity which is not traded in the marketplace. This often takes the form...
original indifference curve; this is the move from A to B. The income effect is the simultaneous move from B to C that occurs because the lower price of one...
of the good—the agent will remain on the same indifference curve before and after the change in the price of the good. The function is named after John...
risk-return indifference curve for the investors. Indifference curves C1, C2 and C3 are shown. Each of the different points on a particular indifference curve...
of indifference between their equilibrium action and the action they would pursue in a system-optimal outcome. Price of anarchy in auctions Price of anarchy...
exchange economy it is the point at which a common tangent to the parties' indifference curves passes through the endowment. His definition of optimality is...
the lover is his unrequited love, which he would at no price relinquish for a state of indifference". Unrequited love stands in contrast to redamancy, the...
gave him after Dale's store was burglarized. Sheldon's friend Tam shows indifference about Sheldon graduating. Sheldon learns he will be valedictorian of...
"Price scissors" refers to an economic phenomenon when for a certain group or sector of productive population, the overall valuation from their production...
known as an “Iso-Product Curve”, or an “Equal Product Curve”. While an indifference curve mapping helps to solve the utility-maximizing problem of consumers...
Global Information