The resolution of how to divide the stakes in an uncompleted game marked the beginning of a systematic analysis of probability – the measure of our confidence that something is going to happen. It brings us to the threshold of the quantification of risk.īernstein’s 1996 masterpiece, subtitled ‘The Remarkable Story of Risk,’ takes as its subject precisely this interplay among history, philosophy, mathematics, and the nature of reality – or, as this interplay might more succinctly be called, finance. The puzzle, which came to be known as the problem of the points, was more significant than it appears. How should the stakes be divided?īefore you grab your calculator, let me add that the monk and mathematician, Luca Paccioli, presented this problem in 1494. They agree to continue until one has won six rounds, The game actually stops when A has won five and B three. Early in Against the Gods, Peter Bernstein presents a puzzle from a Franciscan monk:Ī and B are playing a fair game of balla.
0 Comments
Leave a Reply. |