DeLong: In his testimony [speaking against Dodd-Frank's Office of Financial Research], Mr. Taleb said that “[f]inancial risks, particularly those known as Black Swan events cannot be measured in any possible quantitative and predictive manner; they can only be dealt with [in] nonpredictive ways.” He argued that trying to do what the OFR is designed to do could actually increase risks, in part by increasing “overconfidence” in the information’s ability to predict the next crisis...
His argument is that you should actively seek to be completely ignorant of everything, for if you learn something then you will be overconfident about how much you know and will run unacceptable risks as a result. Better to just shut your eyes and act completely at random. And that makes no sense.
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