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Against the Gods: The Remarkable Story of Risk (平装)
by Peter L. Bernstein
| Category:
Risk, Risk management, Insurance, Investing |
| Market price: ¥ 218.00
MSL price:
¥ 208.00
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| Stock:
In Stock |
MSL rating:
 Good for Gifts |
| MSL Pointer Review:
A remarkable history of risk and a great study of how we make decisions. |
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AllReviews |
1 2   | Total 2 pages 14 items |
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The New York Times (MSL quote), USA
<2006-12-25 00:00>
Ambitious and readable... an engaging introduction to the oddsmakers, whom Bernstein regards as true humanists helping to release mankind from the choke holds of superstition and fatalism. |
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The Wall Street Journal (MSL quote), USA
<2006-12-25 00:00>
An extraordinarily entertaining and informative book. |
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John Kenneth (Galbraith Professor of Economics Emeritus, Harvard University), USA
<2006-12-25 00:00>
With his wonderful knowledge of the history and current manifestations of risk, Peter Bernstein brings us Against the Gods. Nothing like it will come out of the financial world this year or ever. I speak carefully: no one should miss it. |
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Money (MSL quote), USA
<2006-12-25 00:00>
Fascinating... this challenging volume will help you understand the uncertainties that every investor must face. |
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BusinessWeek (MSL quote), USA
<2006-12-25 00:00>
A lively panoramic book... Against the Gods sets up an ambitious premise and then delivers on it. |
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The Washington Post Book World (MSL quote), USA
<2006-12-25 00:00>
A comprehensive history of man's efforts to understand risk and probability, from ancient gamblers in Greece to modern chaos theory. |
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Robert Crawford, USA
<2006-12-25 00:00>
This is a history of the notion of risk, which is written to please both math jocks (gearheads) and poets (their opposites). As a financial advisor, Bernstein knows all about the former, which he can explain in layman terms to the latter. The result is a truly brilliant book.
According to Bernstein, our notion of risk occurred in 3 stages. It began in the 16th C, when Renaissance mathematicians turned their attention to Earth, a major departure from the preoccupations of philosophers since antiquity, who studied the motions of the planetary bodies as the only measurable regularities in nature. The new guys studied dice and other games of chance as well as bookkeeping and the insurance industry (i.e. useful to the rising bourgeoisie). This represented a revolution in our notion of fate, he says, as the future was regarded more as something human beings could master and manipulate regardless of their birth station, etc.
For the next 200 years, Bernstein reports, mathematicians attempted to measure, with rapidly evolving tools (physical and conceptual), what they believed could be "known" with certainty. Pascal and Fermat formulated the general rules for the calculation of probabilities, which was the first real step in the science of risk management, that is, recognizing that math rules could guide decisions about the future. Bernstein argues that this signaled the birth of the modern era, in which rational planning replaced mystics and numerologists.
This was the golden age of classical statistics. First, researchers examined what could be inferred of the whole from a limited number of observations (statistical inference, as in vote sampling today). Then, they turned their gaze to uncertainty, which they might estimate. This resulted in Bayes' theorem, which incorporates intuition into the equation. The bell curve was also discovered.
I found Bernstein's third stage the most interesting, i.e. post-WWI. This was a time when the confidence in Western rationalism came into question, not only whether we operate logically but if we even come to the right conclusions when armed with the "required" information. At this time, the science of risk breaks into a number of competing schools, whose arguments are mutually exclusive, including game theory.
Finally, Bernstein offers up some surprisingly skeptical financial advice. Investment professionals, we learn, rarely do consistently better than random choices (!) and if they develop a system that works, it will quickly become obsolete because others will copy it.
This book is an extremely useful review of the complicated, sometimes arcane techniques that many of us sweated through during late nights a grad student toil. I hated every minute of it, but in Bernstein's hands it is indeed fascinating and written with a remarkable clarity. Bernstein makes a lively case for the judicious use of this risk-analysis techniques - we should take them into account even if we fail to follow them rationally. His book is a useful primer for investor caution, i.e. quantitative techniques are useful but should be questioned continually. There are also innumerable fascinating asides, in which personal details of the mathematicians are examined with humor and psychological depth.
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Wayne Smith, USA
<2006-12-25 00:00>
Bernstein has written a thorough book that traces the linear progression of man's understanding of probability and risk.
This is a journey that begins with the importatioin of the arabic numbering system to the West and ends with super-computer crunched chaos theory. In between lie the fathers (all men) of mathamatical understanding. These individuals are the story of Against the Gods. Bernstein survey's the intellectual contrubutions of each as man strives to understood basic probability, the law of large numbers, bell curves, regression analysis, uncertainty theory and everything else you dimly remember from college statistics classes. He spends the latter quarter of the book on risk and probability theory in the financial world, where theorists have developed portfolio analysis, volitility studies, hedging and sidebets and other quantatative market plays.
Credit to the author for balancing his story against the very high probability that much of what these thinkers sought may be unattainable. He frequently mentions the humanity that these people try to explain with laws formulated from observations in the natural world. Although rightly impressed with his intellectual frontiersmen, Bernstein has no problem recognizing that the uncertainty that has always eluded explanation is us and that it helps make life worth living and progress possible.
This book is interesting for what it is. A story of the development of theories. I would have enjoyed more of a focus on the applications of this intellectual progression that led to the development of insurance and financial markets. Though these elements are mentioned often, they provide the backdrop for Bernsteins survey of theory. I suspect another book awaits someone who will reverse the order and use theory as a backdrop for the mechanisms that have allowed the modern economy to flourish and develop. The story of insurance, speculation, the beginning of capital markets, a monied economy and the like spring from the intellectual movements so well chronicled by Bernstein. However, they are not the focus, which has the habit of making the reading dry and sometimes uninteresting to those not captivated by the actual numeric analyses and proofs which are amply offerred over the course of the book.
If you like intellectual history and are looking to tie the building blocks of probability and risk analysis together over the last four centuries than this book may well captivate you. If you are seeking an understanding of how these discoveries were applied to forge the modern economy we now take for granted you will find parts interesting but may well feel that the story is incomplete.
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Lee Carlson, USA
<2006-12-25 00:00>
The author of this book outlines the history of the theory of risk in the last 450 years and its modern metamorphosis into risk management. The reading is fascinating, giving many historical tales and anecdotes that one could only obtain from time-consuming consultation of many different documents or books. The author confuses skepticism with cynicism at times, especially when discussing the relation between modern financial engineering and risk management, but in general the dialog is pleasant to read, and offers many different insights into the different viewpoints of risk. This is especially true for the discussion of 'prospect theory' as first proposed by Daniel Kahneman and Amos Tversky and its elaboration of risk averse behavior. Readers sympathetic with prospect theory will find its inclusion refreshing, although it would have been even more helpful to such a reader to find a discussion of the relation between prospect theory and its expression, if any, in modern risk management.
The author however seems not to be aware of the notion of 'model risk' that is embedded in modern approaches to risk management and financial engineering. This is apparent when he speaks of the inability of risk analysts to input concepts into computing machines that they themselves cannot conceive. The issue for risk management is not whether these concepts are exact representations or reality, but rather the cost or risk associated with their inaccuracy. In addition, risk analysts do not need to conceptualize on a level that is extremely far from current paradigms. They need not think the 'unthinkable" as the author believes that they do. Instead, their goal is to invent concepts, models or even new paradigms that allow risk managers to make estimates based on these concepts. But these managers do not view these models as sacrosanct, or as "oracles" as the author puts it. In fact there is typically a large amount of skepticism exhibited towards the models, and the managers at time do resort to personal intuitions and hunches.
The author though is correct in his opinion of the huge role of machines in risk management and in finance in general. With each passing day these machines are given more responsibility for doing financial analysis, forecasting, trading, and even model building. And more importantly, they are beginning to actually construct concepts and theories about how markets work, with the guidance for the time being of human experts. This trend will continue, and with faster and faster machines on the horizon, and with more trust placed in these machines, one can expect even more volatility in the financial markets. This volatility will require even smarter machines to deal with the huge risk trade-offs that will be involved, and it is likely that the machines will compete fiercely with each other as the strive to optimize the financial health of the firms that deploy them.
Thus there are very challenging times ahead for risk management, and therefore it is important to keep its role in proper context. It is not done for the sake of it, and it depends on conceptions and theories that were developed centuries ago, as the author of this book shows in great detail. It is wise to keep in mind these historical origins to the same degree that risk algorithms depend on historical data. Risk in the twenty-first century will dwarf anything that has come before, and new political ideologies. legal and regulatory frameworks, and systems of ethics will arise just to deal with its complexity. The degree to which humans are overwhelmed by this risk will be inversely proportional to their willingness to learn from history as well as depart from it, and to interact with the most complex technology ever constructed. |
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Alex Alaniz, USA
<2006-12-25 00:00>
For the lay person, this book provides a wonderful history of the development of risk management ideas througout the centuries. Take for instance the history of the insurer (of celebrity legs) Lloyd's of London: Edward Lloyd opens a coffee house in 1687 near the Thames on Tower Street, a favorite haunt ot men from ships that moored at London's docks. Ship captains would drink coffee and compare notes on the hazards of all the New World routes that were opening up. This led to a list filled with arrival and departure information with notes on conditions abroad and at sea. The information began being used by marine insurance underwriters willing to "buy" the risk of ship disasters... until we arrive at the Lloyd's of London today insuring the fingers of piano players and all else, except the assurance of female chastity (page 90).
The book's one weakness as a history book has to do with the fact that it was published in 1996, just as rational decision theory was being tested in laboratory experiments world-wide - this theory being the theory that we are rational (greedy) agents in our dealings with other rational (greedy) agents. Since 1996, we have learned that populations of people have "saints" who sacrifice for the good of the society, "moralists" who, either from goodwill or fear of punishment, work for the better good of all, and "knaves" who try to ride the system for free.
In rational decision theory, no one in, say, Britain would have signed up to serve in WWI. My (little me) joining the Army can get me killed, and won't significantly alter the odds of the war. I'm rational. This is the logic of rational theory. Hence no one joins the war. In reality, some people, the "saints", self-sacrificed themselves for the better good of their society at large by joining literally out of the goodness (and possbibly "dumbness") of their hearts, while a larger group (the moralists) joined because of goodness and/or fear of punishment. Those men of age (the rational knaves) who didn't sign up, were rapidly ostrasized. English women would present them with white feathers of shame, while children and elder people made life hell for the shirkers. So, eventually, many of the shirkers joined.
To sum up, rational decision theory has many valid conclusions, but fails at key aspects of social cooperation involved in risk management. Look up the research on the "ultimatum game" and "public good games" that has been conducted world-wide since 1996.
For the expert in insurance, or derivative instruments and so on, this book provides a wonderful historical foundation to modern risk management ideas. No, it doesn't discuss long-tailed densities, artificial societies, mathematical ecology, and so on. It is a history book mainly. |
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1 2 | Total 2 pages 14 items |
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