Paul Jorion's Blog

Category: Human complex systems

  • The mirage of a pluridisciplinary “science” of economics

    This is a translation (by Bénédicte Kibler) of my most recent monthly column in the Economy supplement of the French daily Le Monde: Le mirage de la pluridisciplinarité. Robert J. Shiller, professor of economics at Yale University, has published recently, along with his wife Virginia, a psychologist, an article entitled “Economists as Worldly Philosophers” (Cowles…

  • Capitalism (I) – The Veins of the Future

    An English translation of Le capitalisme (I) – Les nervures de l’avenir posted on my French blog on March 2nd. In Reason in History (1837), a posthumous work composed from lecture notes, Hegel observes that “ … what experience and history teach is that peoples and governments have never yet learned from history, let alone…

  • What have anthropologists to tell about the subprime crisis that no one else has said before?

    Finance is in shambles. It has remained until now under the close supervision of economic and financial theory. In recent years, due to the overbearing dominance of views developed under the umbrella of the “Chicago School” of economics, finance has been regarded as explainable through the combination of a very simplified version of psychology: that…

  • Where this blog stands

    Various commitments on papers commissioned in French have kept me away from this blog. Reward is another factor: with an average of around 30 daily hits on the English blog and 2500 on the French one, vanity has been a powerful drive for concentrating on the French one. Dialogue is another one. If you’ve had…

  • Would an interruption of the Gulf Stream be reversible? And if so, at what cost?

    I’m blessed with a very popular blog in French. One of the questions that came up lately in my dialogue with commentators is that of the reversibility of major ecological disasters induced by human activity and of the feasibility of reversing such disasters with the tools pertaining to our current technology. This is a serious…

  • The cunning of Reason

    The very justification of a Human Complex System’s approach to the operation of human societies, implying a continuous explanatory spectrum from the individual (particle) to the cultural or societal levels (field), is offered by Hegel when he writes in Reason in History (*) that … human actions in history produce additional results, beyond their immediate…

  • A population dynamics approach to the subprime crisis

    One way of looking at the subprime crisis – and by this I mean only the properly real estate–based part of the unfolding drama – is in terms of population dynamics, in terms of three populations of borrowers who first entered the market and then left it in reverse order as the last to come…

  • The reasoning artificial toddler

    I was interviewed earlier today by Richard Adhikari, a journalist at TechNewsWorld, about an Artificial Intelligence project. I didn’t know anything about that project except what would be the title of the article: “AI Program Thinks Like a 4-Year-Old”. There is an excellent summary of what I had told the journalist: “I’m always suspicious of…

  • The end of trust in the subprime crisis and how to model it

    The subprime crisis is often explained in terms of trust: one day trust between financial counterparties vanished and here was a crisis. Explanations in terms of “market confidence” refer in fact to two distinct phenomena, one being indeed trust and the other one being more plainly straightforward profitability. Let me start with profitability. Subprime loans…

  • The subprime crisis at UCLA

    I’m happy with the way things worked out yesterday, March 8th, at the UCLA Complexity Science Conference with my paper: The Subprime Crisis: A Human Complex Systems Phenomenon. Of course, trying to squeeze the whole crisis into an hour (1 ¼ with John Bragin’s express permission), it turned out I had much too much material.…

  • Pricing models: why the good ones are useless and the true ones, priceless

    I’ve mentioned already in Agents using financial models and the “human cognitive cocktail” a number of pitfalls linked to the task of modeling the subprime crisis in a Human Complex Systems perspective, especially those related to agents’ partial understanding of the models they’re using or in errors they’re making when using them. I’ve also hinted…

  • Agents using financial models and the “human cognitive cocktail”

    I’m working on the paper to be given at the Human Complex Systems’ one-day conference on March 8th. I don’t want to divulge prematurely any scoop but at the same time I’d like to share some of my puzzlement as I go, and as if thinking aloud. To recap: I’m toying with the concept of…

  • The subprime crisis: a human complex system phenomenon

    I’ll be speaking at UCLA on Saturday March 8th, 2008 at the Human Complex Systems – UCLA Four Campus Complexity Conference, UCLA Haines Hall 352. The conference starts at 9 AM, my own talk is at 2:30 PM. If it looks like proposing an entirely new paradigm for financial studies, that’s because that’s precisely what…

  • The long-term goals of businesses

    Businesses don’t seem to have any long–term goals apart from staying in business. They no doubt provide benefits to their shareholders and executives during their lifetime but why they aim at persisting in their existence with little reflection devoted to the “why?” of it is far from obvious. There is a clear analogy here with…

  • Human Complex Systems

    My French blog was started on February 28th, my English blog, a few days later, on March 3rd, both of this year. By mid-July, the French blog had an average readership of 40 per day, among whom about 20 new readers; by now, 4 months later, the average readership is 160 (over the past 30…

  • Stock prices and the shape of randomness

    I remember an illustration in an article by Heinz von Foerster in the 1960s. In the first picture, a set of tiny cubes were represented, piled up in a random manner. The reader was told that these were steel cubes magnetized on one of their sides. The second picture showed what had happened after the…

  • “Combinatorial Magic” Logic – Proof of Concept

    Loss-less 4-scalar encoding × 175 memory reduction × 1-cycle decode Claim: Any simple sentence can be loss-lessly encoded into 4 scalars (3 UTF-8 strings ≤ 16 bytes each + 1 uint8) while preserving agent / patient / possessor roles and 10 categories + 4 causes. 1. 4-D Vector Definition Dim Type Max len Semantics 0…