Complexity Economics: Proceedings of the Santa Fe Institute's 2019 Fall Symposium

“You should not distort your learning processes to accommodate the delusion.” Unfortunately, this same mindset is taking root within the sustainability community, where in our fervor to have comparability and objectivity, we spend endless hours on backwards-looking and incomplete metrics of environmental, social, and governance performance instead

it is worth noting that the term “efficiency” comes from physics. In physics, efficiency measures how energy translates into useful work; in markets, efficiency measures how information translates into stock prices.

The first is diverse agents. In markets that means people who have different information, time horizons, and rules of behavior. This explains why behavioral biases are not that important. You can have a lot of little mistakes but the market mechanism deals with them effectively.

in the real world, there is no such thing as an externality.

so deeply uncomfortable saying, “I don’t know” or “it depends,” especially in finance.

Markets become inefficient when one of these conditions is violated, and the most likely condition is almost always lack of diversity. We are social animals. Instead of believing different things, we correlate our beliefs.

She said much of the finance industry has too narrow a view of its strategy and goals. It often becomes a short-term, almost zero-sum game with many investors focused only on small relative gains won against each other.

Third, we are fearful creatures and go to great lengths to preserve a sense of certainty, even when we know it to be false.

She explained that an externality was not irrelevant, but, rather, uncounted—a consequence without a cost.