Vox (Free subscription) | 05/08/2008
Jon Danielsson , 8 May 2008 In response to financial turmoil, supervisors are demanding more risk calculations. But model-driven mispricing produced the crisis, and risk models don't perform during crisis conditions. The belief that a really complicated statistical model must be right is merely foolish sophistication. Full Article: Blame the models
Economist's View (Free subscription) | 05/08/2008
I've been meaning to write about this topic, why risk models break down when we need them the most, but this saves me the trouble since it covers most of the points I wanted to make: Blame the models, by...
naked capitalism (Free subscription) | 05/08/2008
One of our pet interests has been how the use of mathematics and models can unwittingly enable people to fool themselves. We see this regularly when working on deals. The model for the target business' performance somehow becomes more real than the company. When the numbers don't work, if you can come up with a good sounding rationale for tweaking them, presto! Suddenly everything in hunky dory. No...
