This paper discusses merger arbitrage as a trading strategy, the benefits of allocating it into a diversified portfolio, and a method of replicating its returns through an alternative investment strategy (writing uncovered index put options). It discusses the approach to implementation, along with the risk and reward profile of the strategy. The paper entitled Characteristics of Risk and Return in Merger arbitrage is used as a basis for the research approach. An up-to-date time series analysis is constructed utilizing the HFRMAI index (a hedge fund index that mirrors a sizable sample of merger risk arbitrage transactions) as a benchmark for testing the effectiveness of the replication strategy (PUT index). Lastly, a live merger arbitrage strategy is executed on a current M&A transaction (the LVMH and Tiffany & Co. acquisition) to assess the acquirer and target firms’ stock volatility and profits or losses.

In an anonymous 4-person economic game, participants contributed more money to a common project (i.e., cooperated) when required to decide quickly than when forced to delay their decision (Rand, Greene & Nowak, 2012), a pattern consistent with the social heuristics hypothesis proposed by Rand and colleagues. The results of studies using time pressure have been mixed, with some replication attempts observing similar patterns (e.g., Rand et al., 2014) and others observing null effects (e.g., Tinghög et al., 2013; Verkoeijen & Bouwmeester, 2014). This Registered Replication Report (RRR) assessed the size and variability of the effect of time pressure on cooperative decisions by combining 21 separate, preregistered replications of the critical conditions from Study 7 of the original article (Rand et al., 2012). The primary planned analysis used data from all participants who were randomly assigned to conditions and who met the protocol inclusion criteria (an intent-to-treat approach that included the 65.9% of participants in the time- pressure condition and 7.5% in the forced-delay condition who did not adhere to the time constraints), and we observed a difference in contributions of −0.37 percentage points compared with an 8.6 percentage point difference calculated from the original data. Analyzing the data as the original article did, including data only for participants who complied with the time constraints, the RRR observed a 10.37 percentage point difference in contributions compared with a 15.31 percentage point difference in the original study. In combination, the results of the intent-to-treat analysis and the compliant-only analysis are consistent with the presence of selection biases and the absence of a causal effect of time pressure on cooperation.