Tuesday, December 16, 2008

Interesting! The gods of complexity have failed us

Fooled by Randomness Again!:
Taleb also has another major problem with computers that has nothing to do with their uses and abuses in banking. From Taleb's perspective, computers have made the whole of the modern economy too complex and too efficient. From inventory management systems that ensure that retail outlets hold the optimal amount of inventory (no less and no more) for a given day and location, to the massive options pricing machines that time trades with millisecond precision, the entirety of the computer-driven global economy is like one massive model that was assembled—most of it over the course of the past decade—on the governing assumption that the future would look pretty much like the past. And when that widely shared assumption breaks down, then the system ceases to behave in a predictable way, because it has been too finely tuned to operate under a set of parameters that no longer pertain. (Or so the argument goes.)
Read the whole piece over at Ars Technica

No comments: