Dynamic Hedging and Average Life - Financial Theory - John Geanakoplos - Lecture 21 of 26 - Video-lecture

Video-lecture, Financial Theory

Description: This lecture reviews the intuition from the previous class, where the idea of dynamic hedging was introduced. We learn why the crucial idea of dynamic hedging is marking to market: even when there are millions of possible scenarios that could come to pass over time, by hedging a little bit each step of the way, the number of possibilities becomes much more manageable.