The portfolio theorists
Subtitle: Von Neumann, Savage, Arrow and Markowitz
By: Colin Read
Publisher: Palgrave Macmillan; Springer
Published: 2012
Place of publication: Houndmills, Basingstoke, Hampshire; New York
Language: eng
Number of pages: 237
ISBN-13: 9780230274143
Subjects: BUSINESS & ECONOMICS / Personal Finance / General; Finance; Economists; BUSINESS & ECONOMICS / Finance; BUSINESS & ECONOMICS / Economics / Theory; Economics; History
Description: This book is the second in a series of discussions about the 'great minds' in the history and theory of finance. The first book examines the role of returns in our personal financial decisions. This second book adds risk and uncertainty to the picture. Colin Read investigates how our treatment of risk and uncertainty necessitated a new understanding of probability. The creation of this fresh treatment of probability induced us to rewrite and to generalize our understanding of financial returns that had to be balanced with risk. While the modeling of risk dramatically complicated our models in finance, it also answered questions that, to then, had challenged our understanding of financial markets and equilibrium. Probability, risk, and uncertainty are examined through the contributions of John von Neumann, Leonard Jimmie Savage, Kenneth Arrow and Harry Markowitz. These Portfolio Theorists provided us with a dramatic leap forward in our understanding and insights of financial rewards under risk and uncertainty. In fact, their results are perhaps more significant and groundbreaking than any other financial theorist before or since. Such brilliance is the hallmark of a great mind.