Applications of the Concept of Subjective Probabilities

It is likely that Leonard Jimmie Savage began to ponder the interdependency of probability and behavior during the year he worked as the statistical analysis assistant to John von Neumann. Both were pure mathematicians who had informed their research based on their extent of human understanding from the emerging economics literature. When their collaboration ended in 1942, each went in slightly different directions. Von Neumann developed a collaboration with Oskar Morgenstern, while Savage did likewise with Milton Friedman. These new partners bent their once convergent research paths in subtly different directions and finance theory is richer for it.