You only live once: Our flawed understanding of risk helps drive financial market instability

(PhysOrg.com) -- Our flawed understanding of how decisions in the present restrict our options in the future means that we may underestimate the risk associated with investment decisions, according to new research by Dr Ole Peters from Imperial College London. The research, published today in the journal Quantitative Finance, suggests how policy makers might reshape financial risk controls to reduce market instability and the risk of market collapse.

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