Pandora's Risk: Uncertainty at the Core of Finance

Paperback | December 16, 2014

byKent Osband

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Author of the acclaimed work Iceberg Risk: An Adventure in Portfolio Theory, Kent Osband argues that uncertainty is central rather than marginal to finance. Markets don't trade mainly on changes in risk. They trade on changes in beliefs about risk, and in the process, markets unite, stretch, and occasionally defy beliefs. Recognizing this truth would make a world of difference in investing. Belittling uncertainty has created a rift between financial theory and practice and within finance theory itself, misguiding regulation and stoking huge financial imbalances.

Sparking a revolution in the mindset of the investment professional, Osband recasts the market as a learning machine rather than a knowledge machine. The market continually errs, corrects itself, and makes new errors. Respecting that process, without idolizing it, will promote wiser investment, trading, and regulation. With uncertainty embedded at its core, Osband's rational approach points to a finance theory worthy of twenty-first-century investing.

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From the Publisher

Author of the acclaimed work Iceberg Risk: An Adventure in Portfolio Theory, Kent Osband argues that uncertainty is central rather than marginal to finance. Markets don't trade mainly on changes in risk. They trade on changes in beliefs about risk, and in the process, markets unite, stretch, and occasionally defy beliefs. Recognizing ...

Kent Osband has worked for twenty-five years as a strategist/economist for major investment firms, international financial institutions, and think tanks. He holds a B.A. magna cum laude from Harvard University and a Ph.D. in economics from the University of California, Berkeley, and has taught at Harvard and at the University of Calif...

other books by Kent Osband

Fooled by Rational Turbulence: How Rational Learning Breeds Market Turbulence, and Why We Need It
Fooled by Rational Turbulence: How Rational Learning Br...

Book & Toy|Mar 10 2014

$69.42 online$78.00list price(save 11%)
Format:PaperbackDimensions:304 pages, 9 × 6 × 0.68 inPublished:December 16, 2014Publisher:Columbia University PressLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:023115173X

ISBN - 13:9780231151733

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Table of Contents

PrefaceAcknowledgmentsAbbreviations1. Introduction2. The Ultimate Confidence Game3. Great Expectations4. Sustainable Debt5. The Midas Touch6. Safety in Numbers7. When God Changes Dice8. Credit- ability9. Insecuritization10. Risks in Value- at- Risk11. Resizing Risks12. ConclusionsAppendixReferencesIndex

Editorial Reviews

Every financial regulator should have this book. Every academic burdened by the lies of Modern Portfolio Theory should get this book. Anyone who fancies himself to be a risk manager should have this book. If you want to understand why financial markets are inherently uncertain, this book will teach you well.