Posts Tagged ‘2008 financial crises’

In his book The Black Swan, Nassim Taleb introduces a term that embodies the fallacy of mistaking mathematical models for that of reality: the Ludic fallacy. Certain practitioners in the mathematical sciences are often guilty of succumbing to this fallacy, with the highest concentration of offenders coming from the fields of finance, economics and statistics. (Even being awarded a Nobel Prize does not grant one immunity from the Ludic fallacy, e.g. the spectacularly epic failure of Myron Scholes and Robert Merton with LTCM.)

An even more spectacular failure (partially stemming from Wall Street financial “engineers” operating under the Ludic fallacy) is the 2008 financial crash. This is just one of countless examples of the arrogance of human beings to presume to “understand” and “tame” complexity. The ancient Greeks have a term for this kind of arrogance: hubris.

Further reading:


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