*Black suspected that something more unpleasant was involved: that his lack of proper warpaint in the form of a degree in economics excluded him from the tribal membership that the editors considered essential for an appearance in the JPE.
*The literature on derivatives is massive, but I especially recommend the Fall 1994 issue of the Journal of Applied Corporate Finance, which is entirely devoted to the subject, and Smithson and Smith's book on managing risk (Smithson and Smith, 1995).
In July 1995, the Federal Reserve Board, the Treasury Department, and the FDIC requested comments on a proposal to revise their requirements for commercial bank risk controls on transactions involving foreign exchange, commodities, and trading in debt and equity instruments. The document runs to 130 single-spaced pages. The so-called Basle Committee, consisting of representatives of central bankers from major economies, has issued the authoritative framework for the supervision of derivatives activities of banks and securities firms; it was published as a Federal Reserve press release on May 16, 1995.
'al-Khowirizmi, the mathematician whose name furnished the root of the word "algorithm," would surely be astonished to see the offspring of what he launched nearly 1200 years ago.
`From 1871 to 1958, stock yields exceeded bond yields by an average of about 1.3 percentage points, with only three transitory reversals, the last in 1929. In an article in Fortune magazine for March 1959 Gilbert Burke declared, "It has been practically an article of faith in the U.S. that good stocks must yield more income than good bonds, and that when they do not, their prices will promptly fall." (See Bank Credit Analyst, 1995.) There is reason to believe that stocks yielded more than bonds even before 1871, which is the starting point for reliable stock market data. Since 1958, bond yields have exceeded stock yields by an average of 3.5 percentage points.
*For an extensive analysis of such cases, see Adams, 1995.
Table of Contents
Acknowledgments
Introduction
1. The Winds of the Greeks and the Role of the Dice
2. As Easy as I, II, III
3. The Renaissance Gambler
4. The French Connection
5. The Remarkable Notions of the Remarkable Notions Man
6. Considering the Nature of Man
7. The Search for Moral Certainty
8. The Supreme Law of Unreason
9. The Man with the Sprained Brain
10. Peapods and Perils
11. The Fabric of Felicity
12. The Measure of Our Ignorance
13. The Radically Distinct Notion
14. The Man Who Counted Everything Except Calories
15. The Strange Case of the Anonymous Stockbroker
16. The Failure of Invariance
17. The Theory Police
18. The Fantastic System of Side Bets
19. Awaiting the Wildness
Notes
Bibliography
Name Index
Subject Index
Solow, Meir Statman, Marta Steele, Richard Thaler, James Tinsley, Frank Trainer, Amos Tversky,*
In the old days, the tools of farming, manufacture, business management, and communication were simp
thereby prompting Bernoulli to invent the Law of Large Numbers and methods of statistical sampling t
The Arabs, through their invasion of India, had become familiar with the Hindu numbering system, whi
The Fibonacci series is a lot more than a source of amusement. Divide any of the Fibonacci numbers b
The Greeks knew this proportion and called it "the golden mean." The golden mean defines the proport
The centerpiece of the Hindu-Arabic system was the invention of zero-sunya as the Indians called it,
Let us follow Cardano's line of reasoning as he details the probability of each throw in a game of d
The 1654 correspondence between Pascal and Fermat on this subject signaled an epochal event in the h
games remaining to settle the outcome of the World Series, we would want to look at the row whose to
what conducts Pascal down the path to a decision-a choice in which the value of the outcome and the
Pascal produced an interesting by-product when he decided to turn over the profits from his bus line
The bills of mortality revealed the causes of death as well as the number of deaths and also listed
After commenting on the incidence of accidents-most of which he asserts are occupation-related-Graun
and departures and reports of accidents and sinkings.*
fire and marine insurance and issued the first life-insurance policies in America-six-term policies
Insurance achieved its full development as a commercial concept only in the eighteenth century, but
Occupational guilds in both Greece and Rome maintained cooperatives whose members paid money into a
In 1738, the Papers of the Imperial Academy of Sciences in St. Petersburg carried an essay with this
These traits seem to have run through the family. Jacob's younger brother and fellow-mathematician J
ber of ways in which it can occur, and then dividing the sum of these products by the total number o
Nicolaus proposes a game to be played between Peter and Paul, in which Peter tosses a coin and conti
The paradox arises because, according to Bernoulli, "The accepted method of calculation [expected va
make an accurate forecast of next quarter's earnings-what is a share of stock in that company worth?
ing 50 ducats hurts the loser more than gaining 50 ducats pleases the winner.*
Against the Gods: The Remarkable Story of Risk Page 40
