Essays in the Theory of Risk-Bearing

"This is a classic book. In both cases DeGroot and Arrow are rooted in the classic foundational work of John von Neumann. He was the first one who thought about weighing risk by the chances of occurrence. So you weigh a risk to be less important if it is less frequent. DeGroot is doing statistics. What Arrow is doing is a parallel theory. Arrow develops decisions theory in the sense of looking at how you react to uncertainty. The book is about economic decisions and it is really simple and very focused. In that book I found another aha! I found the Pandora’s box which produces the same result as I found in DeGroot. His is called SP4 and with Arrow it is an axiom called Monotone Continuity. Although those two look very different I proved they are the same. And by focusing on those I was able to explain to people why we have to do things differently and how to do it. My recent article The Topology of Fear explains all this."