The Flaw of Averages: Why We Underestimate Risk in the Face of Uncertainty

Acknowledgments

I must start by chronologically acknowledging those who were directly involved in the evolution of Probability Management. I am indebted to Ben Ball of MIT, first for infecting me with his interest in portfolios of petroleum exploration projects in the late 1980s, and second for the collaboration that laid the foundations for much that lay ahead. In 1992 Mark Broadie of Columbia University gave me a key (a simple spreadsheet model) that unlocked a world of stochastic modeling. In 2003 I had the pleasure of working with Andy Parker of Bessemer Trust on a retirement planning model that pioneered some important ideas in interactive simulation. In 2004, I began an exciting three-way collaboration with Stefan Scholtes of Cambridge University and Daniel Zweidler, then at Shell. This truly put Probability Management on the map with a large interactive simulation application at Shell and a coauthored article in ORMS Today. During this time, Dan Fylstra of Frontline Systems made a breakthrough in interactive simulation, turning my dream of interactive simulation in spreadsheets into reality.

The following group also played critical roles in the development of this book. My father, Leonard Jimmie Savage, and his colleagues Milton Friedman and Allen Wallis served as towering intellectual role models from my earliest memories. Next, I must thank Linus Schrage of the University of Chicago for his collaboration on What’sBest!, without which I would not have been reborn as a ...