ABSTRACT
The practical elements of gambling and insurance have exerted a strong and persistent influence on the emergence and diffusion of probability models over the last two centuries. For economists, hypothetical gambling and 'games' have also been very influential in connection with the formal treatment of expectations, utility in various forms and optimality or rationality — with 'paradoxes' attracting much attention in the discussion of abstract economic theory and in the resolution of any linkages between theoretical assumptions and the real characteristics of economic choice. In the following sections, probabilistic aspects of this formal treatment are described in five areas of interest, which we identify with the notion of a reasonable or 'fair' bet, the relative measurability or cardinality of individual preferences (as represented by utility), individual aversion or attraction to risk-taking, the fashionable game structure introduced by von Neumann and Morgenstern in the 1940s, and alternative views clarified through paradoxes and other criticisms of some popular ingredients of current economic models.
