Against the Gods: The Remarkable Story of Risk
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- Peter L. Bernstein
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In a narrative that reads like a novel, Against the Gods tells the story of a group of famous scientists and ingenious amateurs who actually discovered the notion of risk—of scientifically linking the present to the future. Like Prometheus, these pioneers equipped humanity with a set of tools that would spark the achievements of the modern world.
People constantly make choices, arrive at decisions, and take risks. Savers buy stocks, doctors perform operations, poker players figure the odds, spaceships soar into the skies, and business managers launch new products. Without the instruments of risk management, such decisions would be impossible, because no one could figure the likelihood of successful outcomes. Indeed, the idea that human beings need not look to the heavens or listen to soothsayers for advice is less than five hundred years old. Hence, without the modern techniques of risk management, most of these decisions would be inconceivable: no bridges would span our widest rivers, our great corporate enterprises would never have come into being, no lives would be saved by coronary bypasses, space travel would be a dream, and no one would play poker.
Against the Gods blends biography with history and science to show how famous thinkers like Pascal, Bernoulli, Bayes, Keynes Markowitz, Arrow and von Neumann paved the way from superstition to the super computer. But Bernstein tells of others as well: men who were less known but equally important in developing the theory and practice of risk management, including a few inveterate gamblers, two ministers, an anonymous group of monks, a doctor, a button salesman, and a composer of operas. The book explains suchconcepts as probability, uncertainty, the distinction between chance and skill, the interactions between gambling and investing, and rational versus irrational decision-making.