Sublime

In complexity economics, agents differ and in general lack full knowledge of each other and of the situation they are in. Fundamental uncertainty is therefore the norm; ill-defined problems are the norm; and rationality is not necessarily well defined. Agents explore and learn and adapt and open to novel behavior. Outcomes may not be in

There is a kind of symbiosis between the irrational traders and the skilled ones—just as, in a poker game, good players need some fish at the table to make the game profitable to play in. In the financial literature, these irrational traders are known as “noise traders.” As the economist Fisher Black wrote in a 1986 essay simply called “Noise”:

With an OPM equity preferred rate of return, there is effectively what is called a cash flow waterfall. First, the OPM equity realizes their pre-tax 8% compound annual rate of return. Second, you realize your pre-tax 8% compound annual rate of return on your percent of equity ownership. Then the remaining cash flow is divided between you and the

But if you think in terms of equilibrium, as I said, there’s a subtle bias with all of us economists. If things are in equilibrium, there’s no way to improve on that, otherwise it wouldn’t be an equilibrium, so we don’t think in terms of people gaming such systems.

The government released a list of more than thirteen thousand past and present Madoff account holders, ranging from hundreds of not very rich Florida retirees to celebrities, billionaires, and nonprofits such as charities and universities. If these legions of investors were easily gulled, often for decades, what does this swindle (and others) say

So far, I have described nothing disconnected from many young adults. What was different was Sam’s financial arrangement with his roommate. He paid for his lodging on a nightly (variable) basis, not with the formality that one rents an overnight hotel room but with the loose arrangement that two long time friends settle up an obligation at the end