Showing posts with label uncertainty. Show all posts
Showing posts with label uncertainty. Show all posts

The Art of Decisions: How to Manage in an Uncertain World (Financial Times Series) Review

The Art of Decisions: How to Manage in an Uncertain World (Financial Times Series)
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Even though making decisions is a life skill, books on decision making never hit main stream. The minority of readers interested in the subject find a great choice of books incl. Think Twice, Seeking Wisdom, Smart Choices. What makes THE ART OF DECISIONS different to the other books is the applicability: the author provides real life issues with real life examples. This earns him my highest praise.
The author covers many examples on decision making as a manager, entrepreneur or VC. The intellectual capability of the author is impressive and readers who like the topics will be excited reading the book. Many of the decision making problems are viewed through the lense of a passionate poker player.
Readers who are familiar with the writings of Nassim Taleb will immediately see some resemblance the in the topics covered in this book. Chris Blake certainly likes Nassim Taleb and the reader might get the feeling that he imitates Nassim Taleb on occasions. While I'm a huge fan of Nassim Taleb, Chris Blake achieves something Nassim Taleb probably won't ever achieve; applicability. On the downside, you will laugh out loud a lot while reading Nassim Taleb which won't happen with this book.
My two favored chapters were `Deciding close to home' and `Deciding far from home'. Basically how we should make decisions where we are experienced (home) and where we are unexperienced (far from home). In particular the later, when we don't have, or don't trust our own experience, we can use `rules of thumbs' to guide our decisions - effectively the experience of others.
Business decisions are decisions about the deployment of resources - people, time or money. This book is worthy every minute and money spent on.


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The Economics of Risk and Time Review

The Economics of Risk and Time
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Gollier has written a book that not many others could have written. It is VERY complete, it is full of deep insights, and, for me, it is a pleasure to read. Don't be mistaken: this is a research book, not a textbook. But for those of us doing research in decision theory, general equilibrium, finance, or macroeconomics, it is simply a must. How could you afford NOT to buy it?

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This book updates and advances the theory of expected utility as appliedto risk analysis and financial decision making. Von Neumann and Morgensternpioneered the use of expected utility theory in the 1940s, but most utilityfunctions used in financial management are still relatively simplistic and assume amean-variance world. Taking into account recent advances in the economics of riskand uncertainty, this book focuses on richer applications of expected utility infinance, macroeconomics, and environmental economics.The book covers these topics:expected utility theory and related concepts; the standard portfolio problem ofchoice under uncertainty involving two different assets; P the basic hyperplaneseparation theorem and log-supermodular functions as technical tools for solvingvarious decision-making problems under uncertainty; s choice involving multiplerisks; the Arrow-Debreu portfolio problem; consumption and saving; the equilibriumprice of risk and time in an Arrow-Debreu economy; and dynamic models of decisionmaking when a flow of information on future risks is expected over time. The book isappropriate for both students and professionals. Concepts are presented intuitivelyas well as formally, and the theory is balanced by empirical considerations. Eachchapter concludes with a problem set.

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