Title: A first-principles way of looking at risk
Product review: Dembo and Freeman approach risk from a very fundamental point of view, going back to the psychology of decision making. In their mark-to-future framework, decisions are evaluated by their expected value across multiple possible scenarios and risk has a different meaning for each decision maker, according to their expected Upside and Regret. For all those exposed to concepts such as Value-at-Risk, this will help put things in perspective.
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