"But I Have to Eat Lunch!"

Spring break is over, and my wife and I are back home.

Right now, I'm "diversifying my portfolio", so to speak. I continue to apply for actuary positions while working on getting my application for the Ph. D. in Risk Management together. I have two of the three necessary transcripts and today at 10 am I'll be taking the GRE. I've taken the GRE before, but that was a looooong time ago, and the committee (which I suspect consists entirely of Dr. G) requires that one's GRE scores be no more than five years old.

My task for yesterday was a conversation with Dr. S, and the discussion was "why do you want a degree in risk management?" You can't say that the reason is "to hedge my bets", but I've always wanted to be an academic. And we had a looooooong discussion, about his work, and the work of economists, and the work of others in the department. It was more like a long extended chat from a person not known as being particularly chatty.

He wanted to know if I had any ideas regarding what kinds of questions I was interested in: actually, I had three:

1. My wife's "sales quota" problem, which I stated as a completely different problem. Given that sales representatives are assigned to clients (which they cannot easily switch, since building a relationship with a client is important), how does one tell whether a salesperson is exceptional vs. one that just has "good leads"?

2. The "hedge fund" for baseball players: can one diversify risk to the market when those risk involve individuals. Say, could one set up a Johnny Damon hedge fund, taking insurance on Damon against the adverse event that Damon's statistics go south?

3. The "rank and yank problem" -- does Jack Welsh's "Rank and Yank" philosophy really work?

Dr. S stated that those were more management problems, and less risk management problems. He gave a good example on research that no one, apparently, has done: decision making for transplants. You're on a waiting list for a new heart, you get the call at 3 am in the morning -- be at the hospital in one hour for a new heart. The operation has a 30 percent chance of killing you. What kinds of decisions do people make, and what does this say about similar market decisions? (Dr. S added that a company's decision maker -- faced with a similar looking "30 percent chance of going bankrupt" decision -- doesn't face the same risks. He might get fired, but he won't lose his life.)

I was very surprised that no one had done work on any of this yet. It was a fascinating type of problem. Can one generalize a solution?

Anyway, we talked for an hour and forty-five minutes. I finally had to beg off for lunch, as I had a class and had not eaten yet. Dr. S will talk to Dr. G, so it all looks promising. But my wife had me applying for new actuary positions the same day.

So how do I spend my days off? Taking four-hour exams. Now you know why I'm so crazy.