Pitkäjärvi, A. and Vacca, M. (2025). Comments to the Editor on “The Willingness to Pay for Diversification” Management Science, 71(6):4825--4827.

Mahmoud [Mahmoud O (2022) The willingness to pay for diversification. Management Sci. 68(8):6235–6249] presents experimental evidence showing that people have an intrinsic preference for diversification that is driven by risk aversion and loss aversion, with risk-averse and loss-averse individuals being more willing to pay for diversification. We document numerous discrepancies between the results reported in the paper and the results calculated from the experimental data. In particular, the data show that risk-averse individuals are actually less willing to pay for diversification, whereas the effect of loss aversion is nonmonotonic and not statistically significant. We thus show that the data do not support the paper{\textquoteright}s claim of a preference for diversification driven by risk aversion and loss aversion.