Perception of risk 3

Not trying to ressurect a thread but readers of
thread 730-226965 (Scares - taking science out of proportion) may be interested in the following

http://www.amazon.co.uk/Risk-Scienc...=sr_1_1?ie=UTF8&s=books&qid=1241781120&sr=1-1

which is a look at the way the brain processes "gut feeling" vs rational thoughts! It also retreads some of the "scare" material but it makes interesting reading.

Regards, HM

No more things should be presumed to exist than are absolutely necessary - William of Occam

 

[JAE]

SomptingGuy - didn't you know that the lottery is really a tax on people with poor math skills?

 

[Neubaten]

I heard lottery is called the extra-tax on fools (Schopenhauer said it)

 

[SomptingGuy]

JAE/Neubaten,

The lottery is indeed an optional tax. I've declined to opt in.


- Steve

 

[Neubaten]

Well, that being said, I bet 1€ every week with my workmates.

So far, the government is wining us by far, but hope is priceless.

 

[cranky108]

I much prefer the one arm bandits then the lottery (The odds are better, and the food is cheaper). But I haven't been doing that lately either.

I am guessing the attraction of the lottery is the big payout. And people play because it gives them a goal.

Do you also call radio stations to win prizes? The odds are better, but just dosen't seem like as much fun.

 

[rhodie]

The Formula that killed Wall Street

The above link appeared in WIRED magazine a few months back. The premise of the article was that a single formula "The Gaussian copula" formula has a significant contributor to the flawed understanding of risk in the credit markets.

Reading the article, you will infer that a poor to mediocre at best understanding of the mathematics of Probability is shared by an entire generation of market analysts.

The fundamental math skills of those who wield the authority of granting credit backed by the assets of the rest of the country is so lacking that it is scary.

The anecdote that 'math is only for engineers and scientists' has poisoned the professional ranks so completely, that serious flaws in practice are not being discovered until they break. In fact, the scope of the problem has been greatly amplified due to the willingness of an ENTIRE INDUSTRY to rely on the mathematical assumptions of just a few analysts. Why? Because no one bothered to learn or undersand the nitty-gritty relationships in the construct of the equations that were used. Travesty.

Where is the 'Perception of Risk' going in the next 5 years? Well, I can boldly certify that it will not improve until some statistical fundamentals and mathematical science is adhered to and upheld in modern business theory. Sometimes that which we don't understand DOES kill us in the end...

 

[jmw]

The question and answer game is well demonstrated by encyplopedia salesmen who use the method most vividly demonstrated in the Yes Minister series (see episode 2 here:

http://www.yes-minister.com/ypmseas1a.htm)

But remember, not everything you read in books applies to engineers who are allegedly more rational and logical than emotional, according to studies....

http://www.bly.com/Pages/documents/STIKFS.html

JMW

http://www.ViscoAnalyser.com

 

[cranky108]

The other side of it is the old addages are not well adheared to. They are thought of as old, and the risk is much lower now than what they were in the past.

The stock market is based on the feel of the enviroment, and company the stock in based on. So understanding of those conditions is the basis of the market. However, the traders don't consiter what if's, and it maybe the perseption of to much complexity.

But what are computers for if they are not used to compute numbers.

 

[HamishMcTavish]

jmw,

Unfortunately engineers are a small percentage of society!

No more things should be presumed to exist than are absolutely necessary - William of Occam

 

[cranky108]

Risk is a teenager driving while talking on a cell phone.

Managed risk is driving on empty, hopeing you will get to a gas station.

Worth the risk is gambling.

Risk investment is insurance.

Risky is eating two week old food left in the fridge.

 

[mauricestoker]

I believe that the amount of perceived risk that a person is willing to take can be measured by how long it takes them to answer their wife's question:

"Does this dress make me look fat?"

 

[SomptingGuy]

"Are you still beating your wife?"

- Steve

 

[mauricestoker]

Not since she showed me the 10 gauge.

 

[cranky108]

I think the correct answer is: "Why would you waste our money on that dress"

Or have you tried: "Who did you have to fight to win that belt"?

 

[SomptingGuy]

The standard answer is "No, it's all the cakes you eat that make you look fat"

- Steve

 

[jmw]

Remind me not to seek marriage guidance from you, SomptingGuy.
If I get a question, any question, along the lines of "Does my bum look good in this?" "Should I wear this dress tonight?" (or one of the 43 others she has already tried on and accessorised in the last two hours that I have been standing by the door, car keys in hand) I have learned to answer a question with a question: "Did you just buy that? I've not seen it before." (Ok so I see it every time she tries it on when we are late being somewhere else).

This is known as risk management. I move the contention into familiar areas and then let the usual polite discussion play along its normal path. I am never (now) so intemperate as to actually answer a direct question... that is where we get into the area of uncharted risks; I could end up in hospital.. or jail.

JMW

http://www.ViscoAnalyser.com