The Tragedy of Modeling

Economics needs a scientific revolution : Article : Nature: "regulation also needs to improve."

Jean-Philippe Bouchaud

Financial engineers have put too much faith in untested axioms and faulty models, says Jean-Philippe Bouchaud. To prevent economic havoc, that needs to change.

Appearing way clearer than Greenspan's allegation, the physicist pointed out one of the key problems: The market trusts the economists who made predictions based on models that were never tested. It could be an interesting game for the kids to build a tower without a plumb, but it sounds not so funny playing with money.