Value judgements

摘要

Three centuries ago, in September 1713， the Swiss mathematician Nikolaus Bernoulli wrote a letter to a fellow mathematician in France, the nobleman Pierre Remond de Montmort. In it, Bernoulli described an innocent-sounding puzzle about a lottery. De Montmort found the problem so thought-provoking that within months, he published the letter in the second edition of his treatise Essai danalyse sur lesjeux de hazard ('Essay on the analysis of games of chance'). Little did the correspondents know that their exchange was the seed for the development of a fundamental concept of human decision-making, which would spawn the emergence of economics as a science.The puzzle is about the gulf between what mathematicians expect from an uncertain event in the future, based on probability theory, and what common sense tells us to do. The reverberations of the conundrums eventual solution 25 years later are still felt today whenever a person chooses whether to buy home insurance, a bank manager decides what interest to charge a customer, or a financier ponders whether the likely returns on a risky venture warrant investing in it.