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2016 | OriginalPaper | Buchkapitel

3. Risk and Uncertainty—Crucial Issues in Finance and Innovation

verfasst von : Jan Emblemsvåg

Erschienen in: Reengineering Capitalism

Verlag: Springer International Publishing

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Abstract

Central in the capitalist system is the management of risk. It is important for technology development because lack of trust can be a significant barrier to the successful commercialization of innovations that are costly, technologically sophisticated, or potentially harmful to human health and the environment. It is also important for the financial industry as they try to anticipate future earnings and the like. To properly manage risks is not just important for investors to avoid losses, but it is important for society to continue accepting socialization of risks, which is crucial for the legitimacy of limited liability. Thus, there is a moral obligation to behave in trustworthy ways for those who want to invest and innovate in addition to managing risk.

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Vorheriges Kapitel The Quest so Far—And Why It Has Failed

Nächstes Kapitel Realigning Finance to Its Original Purpose

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Unfortunately, for subjective probabilities to be considered adequate, internal consistency is not enough. The judgment must be compatible with the entire web of beliefs held by the individual, see Tversky, A. and D. Kahneman (1974). “Judgment under Uncertainty: Heuristics and Biases.” Science 185(4157): pp. 1124–1131.

However, since the scoring using AHP is based on beliefs, and AHP allows a mathematical consistency check, I believe using AHP is the best we can obtain.

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Titel: Risk and Uncertainty—Crucial Issues in Finance and Innovation
verfasst von: Jan Emblemsvåg
Verlag: Springer International Publishing
Buch: Reengineering Capitalism
Print ISBN: 978-3-319-19688-6

Electronic ISBN: 978-3-319-19689-3

Copyright-Jahr: 2016
DOI: https://doi.org/10.1007/978-3-319-19689-3_3

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