Basel II changes risk management in banks strongly. Internal rating procedures would lead one to expect that banks are changing over to active risk control. But, if risk management is no longer a simple "game against natureʺ, if all agents involved are active players then a shift from a...

Modern theories in cognitive psychology and neuroscience indicate that there are two fundamental ways in which human beings comprehend risk. The analytic system uses algorithms and normative rules, such as probability calculus, formal logic, and risk assessment. It is relatively slow, effortful,...