耶鲁大椰学金融市场英文文本financialmarketslecture02transcript.docVIP

Financial Markets: Lecture 2 Transcript Professor Robert Shiller: Today I want to spend--The title of todays lecture is: The Universal Principle of Risk Management, Pooling and the Hedging of Risk. What Im really referring to is what I think is the very original, the deep concept that underlies theoretical finance--I wanted to get that first. It really is probability theory and the idea of spreading risk through risk pooling. So, this idea is an intellectual construct that appeared at a certain point in history and it has had an amazing number of applications and finance is one of these. Some of you--This incidentally will be a more technical of my lectures and its a little bit unfortunate that it comes early in the semester. For those of you who have had a course in probability and statistics, there will be nothing new here. Well, nothing in terms of the math. The probability theory is new. Others though, I want to tell you that it doesnt--if youre shopping--I had a student come by yesterday and ask--hes a little rusty in his math skills--if he should take this course. I said, Well if you can understand tomorrows lecture--thats todays lecture--then you should have no problem. I want to start with the concept of probability. Do you know what a probability is? We attach a probability to an event. What is the probability that the stock market will go up this year? I would say--my personal probability is .45. Thats because Im a bear but--Do you know what that means? That 45 times out of 100 the stock market will go up and the other 55 times out of 100 it will stay the same or go down. Thats a probability. Now, youre familiar with that concept, right? If someone says the probability is .55 or .45, well you know what that means. I want to emphasize that it hasnt always been that way and that probability is really a concept that arose in the 1600s. Before that, nobody ever said that. Ian Hacking, who wrote a history of probability theory, searched through world literat