Related Experiment Video
Updated: Jul 7, 2026

Measuring Delay Discounting in Humans Using an Adjusting Amount Task
Published on: January 9, 2016
The equivalent martingale measure: an introduction to pricing using expectations
1Machine and Computational Learning Group, Department of Computer Science, Troy, NY 12180, USA.
Abstract:
We provide a self contained introduction to the risk neutral or martingale approach to the pricing of financial derivatives, while assuming no financial background. This approach to pricing provides a rich source of problems ideally suited to the application of Monte Carlo methods, thus forming a bridge between computational finance and some of the well developed tools available to engineers and scientists. We illustrate the power of the martingale approach by using it to develop the price of the European call option using only elementary methods and briefly discuss the pricing of the American put option as well as interest rate derivatives.
Related Concept Videos
Expected Value
The Anchoring-and-Adjustment Heuristic
Measures of Central Tendency
Uncertainty in Measurement: Reading Instruments
Measurement: Derived Units
Measurement: Standard Units

