Mundy's Moment: The Samuelson problem

MUNDY'S MOMENT

As an enthusiastic first year university student many years ago, I clearly remember responding to my economic lecturer's recommendation and purchasing Economics by Paul Samuelson.

I know my enthusiasm was short-lived as the book sits in immaculate condition on my shelves at home. Other than a spell working with Professor Samuelson’s daughter a few years later, I confess I have spent little time thinking of him, or his work, in the intervening period. That has changed, as he received a few honourable mentions in a book I have highlighted in the past, Daniel Kahneman’s Thinking, Fast and Slow. Kahneman relates that, in the early 1960s, Samuelson offered a friend a hypothetical gamble in which heads would pay $100, but tails would lose him $50. The friend reject...