A thrilling read for anybody who is interested in 1) the history of ideas, and 2) probability and statistics (measuring stuff, predicting stuff). The first part of the book is mostly celeb-ographies of some of the giants of math: Fibonacci, Pascal, Fermat, Bernoulli, and Gauss, with very good layman's descriptions of the concepts and even a couple of bonus math problems for those so inclined. Once we get to the beginnings of modern finance, starting with Bachelier, the story becomes more fo... (show more)

A thrilling read for anybody who is interested in 1) the history of ideas, and 2) probability and statistics (measuring stuff, predicting stuff). The first part of the book is mostly celeb-ographies of some of the giants of math: Fibonacci, Pascal, Fermat, Bernoulli, and Gauss, with very good layman's descriptions of the concepts and even a couple of bonus math problems for those so inclined. Once we get to the beginnings of modern finance, starting with Bachelier, the story becomes more focused in certain fields of economics, following Keynes, von Neumann and Morgenstern (game theory), Markowitz (Modern Portfolio Theory), Kahneman and Tversky (Prospect Theory), Thaler (behavioral finance), Arrow (general equilibrium theory), Black Scholes and Merton (option theory). He finishes with a too-brief discussion of chaos theory. Throughout the story, Bernstein does an excellent job of providing context: he skillfully weaves in past concepts to show the continuity of the story, while teasingly highlighting when certain developments anticipated later breakthroughs. And he wins major kudos for including not just one but two quatrains by Omar Khayyam. (show less)

I found this book very interesting reading. It was leant to me by a friend after I had read a similar book about hedge funds. While all the mathematical therory meant very little to me. I could still grasp the underlying message of the risk principle and basically that is is no good to put all of your eggs in one basket. The historical references are also fascinating in that they show you the evolution of the principles and theorum that we use every day and the difficulty with which simple... (show more)

I found this book very interesting reading. It was leant to me by a friend after I had read a similar book about hedge funds. While all the mathematical therory meant very little to me. I could still grasp the underlying message of the risk principle and basically that is is no good to put all of your eggs in one basket. The historical references are also fascinating in that they show you the evolution of the principles and theorum that we use every day and the difficulty with which simple statistics were derived in the past. This is quite a fascinating read not just for those involved in the practice of risk management but for anyone wanting to understand the business of casinos or insurance or anyone who finds the theory of the odds fun. It is a bit long but every page puts forward something new for the reader. (show less)

Great book for understanding the evolution of thought on risk management. Starts out with a good historical overview of the development of probability theory and statistical analysis. This is followed by the evolution of thought about how people make economic decisions and the various rationalist theories that dominated until the mid 20th century. The last part of the book covers the introduction and evolution of behavioral economic theory which I always find fascinating.

The last coupl... (show more)

Great book for understanding the evolution of thought on risk management. Starts out with a good historical overview of the development of probability theory and statistical analysis. This is followed by the evolution of thought about how people make economic decisions and the various rationalist theories that dominated until the mid 20th century. The last part of the book covers the introduction and evolution of behavioral economic theory which I always find fascinating.

The last couple of chapters are very timely again. They cover the theory of derivatives and even mention a warning about how complex they are and the serious impacts to the economy that would result should they spin out of control. Too bad more people hadn't read that and understood it.

Recommended for those with an interest in risk or economic theory. (show less)

Everyone who likes History and Economy, or who fells astonished by the recent global economic turmoil, must read this book. The way Bernstein writes about complex issues is very fluent and agreeable. His focus is the risk at games and at financial market.
I read it many years ago, and did it again this week. For he thinks nowadays we are capable to administrate risks, differently of our ancestral. We are seeing, instead, many people, companies and countries, do not know how to do it, what is... (show more)

Everyone who likes History and Economy, or who fells astonished by the recent global economic turmoil, must read this book. The way Bernstein writes about complex issues is very fluent and agreeable. His focus is the risk at games and at financial market.
I read it many years ago, and did it again this week. For he thinks nowadays we are capable to administrate risks, differently of our ancestral. We are seeing, instead, many people, companies and countries, do not know how to do it, what is a real problem.
Well, it is always a pleasure to read Bernstein. In addition, we learn too much with him. More than History and Economics, we learn about culture, people comportment, numbers and much more. It is a very good book. (show less)

My favorite phrase from this book talks about how the development of probability theory allows the "future to serve the present". Starting with gamblers in ancient Greece, continuing through the 17th-century French mathematicians Pascal and Fermat and up to modern chaos theory Bernstein conveys the personalities of the famous and not so famous names that developed the tools we use for everything from wine-making to derivatives (oh, bad example!). Anyway, this ubiquitous view of the ... (show more)

My favorite phrase from this book talks about how the development of probability theory allows the "future to serve the present". Starting with gamblers in ancient Greece, continuing through the 17th-century French mathematicians Pascal and Fermat and up to modern chaos theory Bernstein conveys the personalities of the famous and not so famous names that developed the tools we use for everything from wine-making to derivatives (oh, bad example!). Anyway, this ubiquitous view of the future is an essential foundation of our markets, our government, and out lives. (show less)