Statistics, Honesty, Options Premium Valuation
Honesty, Options Premium
Let us enter this mind game of options premium on valuation a person’s honesty. Tomorrow we list options on a person’s (say named XYX) honesty so that this is traded publicly in the market. The challenge is to find an acceptable options premium.
Call Options, Put Options, Honesty Options Premium
Let us assume that Call Options premium represents the higher level of honesty the underlying represents while put options premium represent the lower level of honesty the underlying represents. All these are weighed on datum of average honesty of entire human race.
The root problem in valuation would be how we perceive this XYX’s listing prospects, XYX’s historical performance, and our personal life experience. This valuation alters with time and new knowledge of the person. When we want to measure honesty options premium, we are trying to put a valuation to something that is intrinsically qualitative.
Statistics and Honesty Option Premium
It is neither illustrative nor descriptive to use statistics to describe a qualitative outcome, unless this outcome can be measured, represented numerically so that it can be manipulated like any other set of numbers.
It is analogous a meaningless to comparison between blue and green color. However, like all qualitative objects, it is meaning to draw an indirect valuation like comparison of likes and dislikes blue to green.
The book by Aczel-Sounderpandian clarified that statistics is derived from the Italian word stato, which means “state” and statista refers to a person involved with the affairs of the state. Aczel-Sounderpandian pieced them together to into a collection of facts that are supposed to be useful to the statista.
Research on Honesty
There is continuous research in honesty, especially in courts, parliament (enshrined in statutes), and common law judgments etc. These unwilling researchers are judges and jury, legislators, law professors etc. We briefly look at what these groups of inadvertent researchers understand about honesty and the premium to be paid when the level of honesty is not according to expectations of the law. In our case, its an options premium on value of honesty.