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Index
Cover
Title Page
Copyright
Contents
Chapter 1 | Introducing Risk: The What and Unusual Where of It
What Is Risk?
Brothel-Nomics
Finance: The Science of Risk
The Rules of Risk
The World Gets Riskier and You Can Own It
Rule 1: No Risk, No Reward
Chapter 2 | Reward: Getting What You Want Takes Knowing What You Want
The Minibon
The Price of Risk-Free
Risk-Free for Me, but Not for Thee
Chapter 3 | Taking a Risk: When to Reject Safety and Go for More
Sometimes Even Economists Get Risk-Free Wrong
Risk-Free Retirement
Chapter 4 | Risk Measurement: Hollywood’s Never-Ending Quest for Certainty
The Land of Broken Risk Models
Turning Data into Risk: What Normally Happens
The Movie Business: Skew You
The Past Is a Lousy Way to Predict the Future
Terrible Is the Best We’ve Got, and It’s Coming to a Theater Near You
Chapter 5 | Different Types of Risk: The Secret Lives of the Paparazzi
The Paparazzi’s Golden Rules
The Paparazzi Gold Rush
Idiosyncratic Versus Systematic Risk
It Pays to Know the Difference
The Paparazzi Are Just Like Us Too
Why We Feel So Much Economic Anxiety
Rule 2: I Am Irrational and I Know It
Chapter 6 | Prospect Theory: Tilting Toward Rationality
You Can’t Spell Hellmuth Without Hell
Why We Hate to Lose
Break-Even Effect at Work: The World of Online Poker
Does It Matter if We Are Irrational?
How to Take Risks Like a Poker Champion
Chapter 7 | Risk Misperception: I Never Thought I’D Get Caught
Crazy, Indeed
We Are All Lousy at Understanding Probabilities
Thinking Probabilistically Isn’t Natural
How to Take Control
Rule 3: Get the Biggest Bang for Your Risk Buck
Chapter 8 | Diversification: Looking for Efficiency in All the Wrong Places
Pity the Teaser
The Stud Market Is Inefficient
How Breeders Reduce Their Risk
Inbreeding
The Benefits of Diversification
A Self-Described Nerd Starts a Revolution
Horse Breeding’s Answer to Harry Markowitz?
Rule 4: Be the Master of Your Domain
Chapter 9 | De-Risking: The Art of the Hedge
Hedging
Invest More in a Risk-Free Asset
Buy Something That Goes Up When Another Thing Goes Down
Negative Hedge: More Risk, More Reward
Hedging the Future of Cruising
Chapter 10 | Insurance: Introducing the Spectacular Stock Option
Insurance Is Magic
Options
The Greeks Know Risk
Insurance Is Magic with Contracts
Are Options an Illusion?
Chapter 11 | Moral Hazards: Surfing Big Waves with Insurance
Big Wave Surfers Are Just Like Actuaries, Only with Better Tans
Brothers from Another Mother
80-Foot Waves in Finance
The Golden Age Wasn’t So Golden
How Can We Do Better?
Rule 5: Uncertainty Happens
Chapter 12 | Uncertainty: The Fog of War
The Battle of 73 Easting
Unknown Unknowns
Doomed to Repeat History Because We Are Often Blind to Uncertainty
How to Deal with Uncertainty
What We All Need to Learn from the Military
Acknowledgments
Notes
Index
About the Author
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