The only exceptions are a single loyalist American consumer, who only drinks American wine and is indifferent to trendiness, and a single loyalist German consumer, whose only drinks German wine and is likewise indifferent to trendiness.
Similarly, the trendy consumer also would not gain utility from adopting the German loyalist's strategy.
[4] While the wine and the apples are toy examples, the paradox has a real-world application to what currencies investors should choose to hold.
Fischer Black concluded from analyses similar to the apple/orange example that when investing overseas, investors should not seek to hedge all their currency risk.
In many circumstances, Seigel's paradox should indeed drive a rational investor to become more willing to embrace modest currency risk.
[4] A different approach to Seigel's paradox is proposed by K. Mallahi-Karai and P. Safari,[5] where they show that the only possible way to avoid making risk-less money in such future-based currency exchanges is to settle on the (weighted) geometric mean of the future exchange rates, or more generally a product of the weighted geometric mean and a so-called reciprocity function.
This method will provide currency traders on both sides with a common exchange rate they can safely agree on.