Saturday, March 10, 2007

Risk etc.

I'm back...
Just a couple of interesting (in the mind of the beholder?) topics of study that I've come across...

The so called St. Petersburg Paradox is an interesting problem. It is where probability and economics come together. This problem attempts to value the marginal, the additional, the extra. The value is widely thought of as utility.

Economics makes use of the word 'utility'. That word is loaded, and the interpretation can lead to different places. It is interesting to me that fundamental economics depends on this interpretation. Relating this to Aqa Moula's noorani kalemo, I attempt to very very loosely paraphrase Aqa Moula's Chelum vaas, "benefit should be taken from wealth". I'm not sure what my point is, but I'd love to hear any thoughts you have.

Another thing I came across,
Bodie, Kane, and Marcus define gambling as 'the assumption of risk for the enjoyment of risk' and they define speculation as 'the assumption of risk in spite of risk for a perceived favorable risk-return trade-off'
A fine line if you ask me. Again no real point, but I'd love to hear any thoughts.

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