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The results of his studies in decision theory are used in diverse fields such as climate change and portfolio allocation

When defending the precautionary principle the Stern Review - the 2006 report on climate change considered a milestone in the public awareness of the problem – cites a couple of papers by Massimo Marinacci (Department of Decision Sciences), one in joint with Fabio Maccheroni (Department of Decision Sciences), which give a formal description of the principle.

Marinacci, a full professor of applied mathematics at Università Bocconi since November 2009, covers a scientific field, decision theory, with a great tradition at Bocconi. "Following the footsteps of Erio Castagnoli and Aldo Montesano, some of the key players in the field are associated with Bocconi, as faculty or graduates. In my department I collaborate with Fabio Maccheroni and Simone Cerreia-Vioglio to study decision-making in conditions of uncertainty", he says. If their work has a glamorous application in climate change studies, the main users of the findings of their field of study are finance people interested in portfolio allocation when uncertainty reigns. And the last years, in the middle of the financial crisis, have been busy for uncertainty specialists.

Frank Hyneman Knight and John Maynard Keynes, in the 1920s, distinguished between risk, referring to situations described by known or calculable probabilities, and uncertainty, where probabilities are neither given nor computable. Statisticians refer to the description of real world situations through probability lenses as the Bayesian approach.

Until the 1980s the Bayesian approach has been the prevailing one, eventually substituting subjective probabilities (as perceived or calculated by the decision maker) for objective ones in order to fill the probability box at any cost. Everything used to be dealt with as dice, coins or balls randomly drawn from urns. "Unfortunately", Marinacci wrote in a recent paper with Itzhak Gilboa (HEC Paris and Tel-Aviv University), "these examples tend to pop up mostly in the context of gambling or probability courses". Hence the need for a more realistic and complex description of the events we face in our everyday life.

Marinacci and the other uncertainty scholars think we have to admit our "ignorance" and give up the idea of always filling the probability box and they provide mathematical tools which allow decision makers to face uncertain situations in a rational way. "We don't provide solutions", he explains, "we don't provide percentages, we formalize models that clarify what alternatives decision makers face and how they should handle them. Then it's up to them to choose".

Marinacci is a Bocconi graduate in Economics and gained his PhD at Northwestern University, Evanston (Illinois). He worked in Canada (University of Toronto) before coming back to Italy in 1998. After a stint at Università di Bologna and nine years at Università di Torino and Collegio Carlo Alberto he joined Bocconi in 2009. He's principal investigator (team leader) for a € 1.4 million Advanced Grant awarded by the European Research Council and hosted at Bocconi.

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