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

    Feb 20, 2008 8:10 PM

    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

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    comment(s): Pricing models: why the good ones are useless and the true ones, priceless

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

    Feb 9, 2008 11:32 PM

    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.

    Rube</a/></a></p></p><p class="wp-block-post-excerpt__more-text"><a class="wp-block-post-excerpt__more-link" href="https://www.pauljorion.com/blog_en/2008/02/10/agents-using-financial-models-and-the-%e2%80%9chuman-cognitive-cocktail%e2%80%9d/">read more…</a></p></div>


<div class="wp-block-group is-content-justification-right is-nowrap is-layout-flex wp-container-core-group-is-layout-17124a9a wp-block-group-is-layout-flex"><div class="wp-block-post-comments-count">3</div>

<a class="wp-block-read-more" href="https://www.pauljorion.com/blog_en/2008/02/10/agents-using-financial-models-and-the-%e2%80%9chuman-cognitive-cocktail%e2%80%9d/" target="_self">comment(s)<span class="screen-reader-text">: Agents using financial models and the “human cognitive cocktail”</span></a></div>



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</li><li class="wp-block-post post-98 post type-post status-publish format-standard hentry category-finance category-human-complex-systems category-subprime">

<div class="wp-block-group is-layout-flow wp-block-group-is-layout-flow"><h2 class="alignwide wp-block-post-title has-var-wp-custom-typography-font-size-huge-clamp-2-25-rem-4-vw-2-75-rem-font-size"><a href="https://www.pauljorion.com/blog_en/2008/01/25/the-subprime-crisis-a-human-complex-system-phenomenon/" target="_self" >The subprime crisis: a human complex system phenomenon</a></h2>


<div class="wp-block-group is-content-justification-left is-nowrap is-layout-flex wp-container-core-group-is-layout-fc9f69e7 wp-block-group-is-layout-flex"><div class="wp-block-post-date"><time datetime="2008-01-25T04:22:18+01:00"><a href="https://www.pauljorion.com/blog_en/2008/01/25/the-subprime-crisis-a-human-complex-system-phenomenon/">Jan 25, 2008 3:22 AM</a></time></div></div>




<div class="wp-block-post-excerpt"><p class="wp-block-post-excerpt__excerpt"><p>I’ll be speaking at UCLA on Saturday March 8th, 2008 at the<br /> <strong>Human Complex Systems – UCLA Four Campus Complexity Conference</strong>,<br /> UCLA Haines Hall 352. The conference starts at 9 AM, my own talk is at 2:30 PM.</p> <p>If it looks like proposing an entirely new paradigm for financial studies, that’s because that’s</p></p><p class="wp-block-post-excerpt__more-text"><a class="wp-block-post-excerpt__more-link" href="https://www.pauljorion.com/blog_en/2008/01/25/the-subprime-crisis-a-human-complex-system-phenomenon/">read more…</a></p></div>


<div class="wp-block-group is-content-justification-right is-nowrap is-layout-flex wp-container-core-group-is-layout-17124a9a wp-block-group-is-layout-flex"><div class="wp-block-post-comments-count">4</div>

<a class="wp-block-read-more" href="https://www.pauljorion.com/blog_en/2008/01/25/the-subprime-crisis-a-human-complex-system-phenomenon/" target="_self">comment(s)<span class="screen-reader-text">: The subprime crisis: a human complex system phenomenon</span></a></div>



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</li><li class="wp-block-post post-97 post type-post status-publish format-standard hentry category-economy category-subprime">

<div class="wp-block-group is-layout-flow wp-block-group-is-layout-flow"><h2 class="alignwide wp-block-post-title has-var-wp-custom-typography-font-size-huge-clamp-2-25-rem-4-vw-2-75-rem-font-size"><a href="https://www.pauljorion.com/blog_en/2008/01/24/the-subprime-crisis-in-2007/" target="_self" >The subprime crisis in 2007</a></h2>


<div class="wp-block-group is-content-justification-left is-nowrap is-layout-flex wp-container-core-group-is-layout-fc9f69e7 wp-block-group-is-layout-flex"><div class="wp-block-post-date"><time datetime="2008-01-24T16:51:26+01:00"><a href="https://www.pauljorion.com/blog_en/2008/01/24/the-subprime-crisis-in-2007/">Jan 24, 2008 3:51 PM</a></time></div></div>




<div class="wp-block-post-excerpt"><p class="wp-block-post-excerpt__excerpt"><p>I’m aware I’ve neglected my English blog but there were two good justifications for that: I was finishing writing up a new book called “La crise des subprimes en 2007” (untranslatable) and I was promoting that coming book in Paris by <a href="http://www.pauljorion.com/blog/?p=306 ">speaking</a> at the Ecole Normale Supérieure, <a href="http://www.pauljorion.com/blog/?p=310">talking </a> on the radio</p></p><p class="wp-block-post-excerpt__more-text"><a class="wp-block-post-excerpt__more-link" href="https://www.pauljorion.com/blog_en/2008/01/24/the-subprime-crisis-in-2007/">read more…</a></p></div>


<div class="wp-block-group is-content-justification-right is-nowrap is-layout-flex wp-container-core-group-is-layout-17124a9a wp-block-group-is-layout-flex"><div class="wp-block-post-comments-count">1</div>

<a class="wp-block-read-more" href="https://www.pauljorion.com/blog_en/2008/01/24/the-subprime-crisis-in-2007/" target="_self">comment(s)<span class="screen-reader-text">: The subprime crisis in 2007</span></a></div>



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</li><li class="wp-block-post post-96 post type-post status-publish format-standard hentry category-economy category-finance category-subprime">

<div class="wp-block-group is-layout-flow wp-block-group-is-layout-flow"><h2 class="alignwide wp-block-post-title has-var-wp-custom-typography-font-size-huge-clamp-2-25-rem-4-vw-2-75-rem-font-size"><a href="https://www.pauljorion.com/blog_en/2007/12/21/2008s-new-fad-rating-cliffs-and-credit-cliffs/" target="_self" >2008’s new fad: “rating cliffs” and “credit cliffs”</a></h2>


<div class="wp-block-group is-content-justification-left is-nowrap is-layout-flex wp-container-core-group-is-layout-fc9f69e7 wp-block-group-is-layout-flex"><div class="wp-block-post-date"><time datetime="2007-12-21T18:07:09+01:00"><a href="https://www.pauljorion.com/blog_en/2007/12/21/2008s-new-fad-rating-cliffs-and-credit-cliffs/">Dec 21, 2007 5:07 PM</a></time></div></div>




<div class="wp-block-post-excerpt"><p class="wp-block-post-excerpt__excerpt"><p>Do you know what will be all the rage in 2008 in the wake of the <em>subprime</em> crisis? “Rating cliffs” and “credit cliffs” when firms that have seen a slow erosion of their credit will all of a sudden drop like a stone. As I devoted a whole chapter to the subject back in 2003</p></p><p class="wp-block-post-excerpt__more-text"><a class="wp-block-post-excerpt__more-link" href="https://www.pauljorion.com/blog_en/2007/12/21/2008s-new-fad-rating-cliffs-and-credit-cliffs/">read more…</a></p></div>


<div class="wp-block-group is-content-justification-right is-nowrap is-layout-flex wp-container-core-group-is-layout-17124a9a wp-block-group-is-layout-flex"><div class="wp-block-post-comments-count">3</div>

<a class="wp-block-read-more" href="https://www.pauljorion.com/blog_en/2007/12/21/2008s-new-fad-rating-cliffs-and-credit-cliffs/" target="_self">comment(s)<span class="screen-reader-text">: 2008’s new fad: “rating cliffs” and “credit cliffs”</span></a></div>



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</li><li class="wp-block-post post-94 post type-post status-publish format-standard hentry category-artificial-intelligence">

<div class="wp-block-group is-layout-flow wp-block-group-is-layout-flow"><h2 class="alignwide wp-block-post-title has-var-wp-custom-typography-font-size-huge-clamp-2-25-rem-4-vw-2-75-rem-font-size"><a href="https://www.pauljorion.com/blog_en/2007/11/30/the-individual-unit-in-the-network-as-far-as-speech-generation-is-concerned-is-a-word-pair/" target="_self" >The individual unit in the network as far as speech generation is concerned is a word-pair</a></h2>


<div class="wp-block-group is-content-justification-left is-nowrap is-layout-flex wp-container-core-group-is-layout-fc9f69e7 wp-block-group-is-layout-flex"><div class="wp-block-post-date"><time datetime="2007-11-30T02:12:31+01:00"><a href="https://www.pauljorion.com/blog_en/2007/11/30/the-individual-unit-in-the-network-as-far-as-speech-generation-is-concerned-is-a-word-pair/">Nov 30, 2007 1:12 AM</a></time></div></div>




<div class="wp-block-post-excerpt"><p class="wp-block-post-excerpt__excerpt"><p><strong>Thought as word dynamics. II. Architecture (5)</strong></p> <p>Mathematically speaking, a graph is a set of ordered pairs. It can be decomposed in elementary units of individual pairs. Each of the two elements in an ordered pair represents a <em>node</em> in the graph and every pair represents an <em>edge</em>. Say, there are four nodes, A, B,</p></p><p class="wp-block-post-excerpt__more-text"><a class="wp-block-post-excerpt__more-link" href="https://www.pauljorion.com/blog_en/2007/11/30/the-individual-unit-in-the-network-as-far-as-speech-generation-is-concerned-is-a-word-pair/">read more…</a></p></div>


<div class="wp-block-group is-content-justification-right is-nowrap is-layout-flex wp-container-core-group-is-layout-17124a9a wp-block-group-is-layout-flex"><div class="wp-block-post-comments-count">1</div>

<a class="wp-block-read-more" href="https://www.pauljorion.com/blog_en/2007/11/30/the-individual-unit-in-the-network-as-far-as-speech-generation-is-concerned-is-a-word-pair/" target="_self">comment(s)<span class="screen-reader-text">: The individual unit in the network as far as speech generation is concerned is a word-pair</span></a></div>



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</li><li class="wp-block-post post-93 post type-post status-publish format-standard hentry category-anthropology category-economy category-human-complex-systems">

<div class="wp-block-group is-layout-flow wp-block-group-is-layout-flow"><h2 class="alignwide wp-block-post-title has-var-wp-custom-typography-font-size-huge-clamp-2-25-rem-4-vw-2-75-rem-font-size"><a href="https://www.pauljorion.com/blog_en/2007/11/27/the-long-term-goals-of-businesses/" target="_self" >The long-term goals of businesses</a></h2>


<div class="wp-block-group is-content-justification-left is-nowrap is-layout-flex wp-container-core-group-is-layout-fc9f69e7 wp-block-group-is-layout-flex"><div class="wp-block-post-date"><time datetime="2007-11-27T00:57:58+01:00"><a href="https://www.pauljorion.com/blog_en/2007/11/27/the-long-term-goals-of-businesses/">Nov 26, 2007 11:57 PM</a></time></div></div>




<div class="wp-block-post-excerpt"><p class="wp-block-post-excerpt__excerpt"><p>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</p></p><p class="wp-block-post-excerpt__more-text"><a class="wp-block-post-excerpt__more-link" href="https://www.pauljorion.com/blog_en/2007/11/27/the-long-term-goals-of-businesses/">read more…</a></p></div>


<div class="wp-block-group is-content-justification-right is-nowrap is-layout-flex wp-container-core-group-is-layout-17124a9a wp-block-group-is-layout-flex"><div class="wp-block-post-comments-count">1</div>

<a class="wp-block-read-more" href="https://www.pauljorion.com/blog_en/2007/11/27/the-long-term-goals-of-businesses/" target="_self">comment(s)<span class="screen-reader-text">: The long-term goals of businesses</span></a></div>



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</li><li class="wp-block-post post-91 post type-post status-publish format-standard hentry category-human-complex-systems">

<div class="wp-block-group is-layout-flow wp-block-group-is-layout-flow"><h2 class="alignwide wp-block-post-title has-var-wp-custom-typography-font-size-huge-clamp-2-25-rem-4-vw-2-75-rem-font-size"><a href="https://www.pauljorion.com/blog_en/2007/11/23/human-complex-systems/" target="_self" >Human Complex Systems</a></h2>


<div class="wp-block-group is-content-justification-left is-nowrap is-layout-flex wp-container-core-group-is-layout-fc9f69e7 wp-block-group-is-layout-flex"><div class="wp-block-post-date"><time datetime="2007-11-23T16:21:37+01:00"><a href="https://www.pauljorion.com/blog_en/2007/11/23/human-complex-systems/">Nov 23, 2007 3:21 PM</a></time></div></div>




<div class="wp-block-post-excerpt"><p class="wp-block-post-excerpt__excerpt"><p>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</p></p><p class="wp-block-post-excerpt__more-text"><a class="wp-block-post-excerpt__more-link" href="https://www.pauljorion.com/blog_en/2007/11/23/human-complex-systems/">read more…</a></p></div>


<div class="wp-block-group is-content-justification-right is-nowrap is-layout-flex wp-container-core-group-is-layout-17124a9a wp-block-group-is-layout-flex"><div class="wp-block-post-comments-count">0</div>

<a class="wp-block-read-more" href="https://www.pauljorion.com/blog_en/2007/11/23/human-complex-systems/" target="_self">comment(s)<span class="screen-reader-text">: Human Complex Systems</span></a></div>



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</li><li class="wp-block-post post-89 post type-post status-publish format-standard hentry category-essential-questions">

<div class="wp-block-group is-layout-flow wp-block-group-is-layout-flow"><h2 class="alignwide wp-block-post-title has-var-wp-custom-typography-font-size-huge-clamp-2-25-rem-4-vw-2-75-rem-font-size"><a href="https://www.pauljorion.com/blog_en/2007/11/18/gold-fish/" target="_self" >Gold fish</a></h2>


<div class="wp-block-group is-content-justification-left is-nowrap is-layout-flex wp-container-core-group-is-layout-fc9f69e7 wp-block-group-is-layout-flex"><div class="wp-block-post-date"><time datetime="2007-11-18T16:36:39+01:00"><a href="https://www.pauljorion.com/blog_en/2007/11/18/gold-fish/">Nov 18, 2007 3:36 PM</a></time></div></div>




<div class="wp-block-post-excerpt"><p class="wp-block-post-excerpt__excerpt"><p>I just had an odd vision. It happens on Judgment Day and I am shocked at the questions being asked from me: “How many gold fish in your care died of neglect? How many babies did you leave crying in the dark? Who were they? How many daisies did you trample?” I say “I feel</p></p><p class="wp-block-post-excerpt__more-text"><a class="wp-block-post-excerpt__more-link" href="https://www.pauljorion.com/blog_en/2007/11/18/gold-fish/">read more…</a></p></div>


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<a class="wp-block-read-more" href="https://www.pauljorion.com/blog_en/2007/11/18/gold-fish/" target="_self">comment(s)<span class="screen-reader-text">: Gold fish</span></a></div>



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</li><li class="wp-block-post post-88 post type-post status-publish format-standard hentry category-artificial-intelligence">

<div class="wp-block-group is-layout-flow wp-block-group-is-layout-flow"><h2 class="alignwide wp-block-post-title has-var-wp-custom-typography-font-size-huge-clamp-2-25-rem-4-vw-2-75-rem-font-size"><a href="https://www.pauljorion.com/blog_en/2007/11/11/the-network-comprises-a-subset-of-the-words-the-%e2%80%9ccontent-words%e2%80%9d-of-a-particular-natural-language/" target="_self" >The network comprises a subset of the words (the “content words”) of a particular natural language</a></h2>


<div class="wp-block-group is-content-justification-left is-nowrap is-layout-flex wp-container-core-group-is-layout-fc9f69e7 wp-block-group-is-layout-flex"><div class="wp-block-post-date"><time datetime="2007-11-11T14:58:18+01:00"><a href="https://www.pauljorion.com/blog_en/2007/11/11/the-network-comprises-a-subset-of-the-words-the-%e2%80%9ccontent-words%e2%80%9d-of-a-particular-natural-language/">Nov 11, 2007 1:58 PM</a></time></div></div>




<div class="wp-block-post-excerpt"><p class="wp-block-post-excerpt__excerpt"><p><strong>Thought as word dynamics. II. Architecture (4)</strong></p> <p>In Indo-European languages there are two types of words. Every speaker has a very strong intuitive feeling of this. We have no difficulty when defining the meaning – or offering a definition – of words of the first type: “a rose is a flower that has many petals,</p></p><p class="wp-block-post-excerpt__more-text"><a class="wp-block-post-excerpt__more-link" href="https://www.pauljorion.com/blog_en/2007/11/11/the-network-comprises-a-subset-of-the-words-the-%e2%80%9ccontent-words%e2%80%9d-of-a-particular-natural-language/">read more…</a></p></div>


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<a class="wp-block-read-more" href="https://www.pauljorion.com/blog_en/2007/11/11/the-network-comprises-a-subset-of-the-words-the-%e2%80%9ccontent-words%e2%80%9d-of-a-particular-natural-language/" target="_self">comment(s)<span class="screen-reader-text">: The network comprises a subset of the words (the “content words”) of a particular natural language</span></a></div>



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      1. Paul Jorion on Unilog 2022 – What makes a demonstration worthy of the name?, now on arXivTuesday, September 2, 2025

        Well! It is comments such as yours that make the trip … worthy of the trouble! 😀

      2. John Augustine McCain on Unilog 2022 – What makes a demonstration worthy of the name?, now on arXivTuesday, September 2, 2025

        When I saw your work on P vs NP, I knew you were on to something profound. I couldn’t have…

      3. John Augustine McCain on How I discovered the mechanism of consciousness … in 1999 – Episode 7. A Synthetic Article on a Cross-Flow Resonance Theory of ConsciousnessFriday, August 29, 2025

        Admittedly, I was a little thrown off by the direction this took. From my perspective, you (1) identified the major…

      4. John Augustine McCain on How I discovered the mechanism of consciousness … in 1999 – Episode 5. How consciousness constructs a meaningful present momentTuesday, August 26, 2025

        It’s wonderful seeing you at work with AI to formalize the synthesis of the insights you had so many years…

      5. John Augustine McCain on P vs NP exposed?Sunday, August 10, 2025

        I solved it! Paradox! The epistemic barrier was always in Paradox. Maintain truth as ambiguous (Both true OR false) until…

      6. Paul Jorion on Paris Defence and Strategy Forum – The Silent War and Strategic Mobilization in the Age of Infrastructure Warfare, March 12th 2025Sunday, February 16, 2025

        This article goes along with what I was writing. It turns out it was published one day earlier than my…

      7. Paul Jorion on A NEW “US” FOR NEW TIMES. XIII. Scaling upTuesday, November 12, 2024

        LLMs deal essentially with language but seems amenable to graphics as well. To such an extent that one may wonder…

      8. bogobogo on A NEW “US” FOR NEW TIMES. XIII. Scaling upFriday, November 8, 2024

        “the marvellous powers of the brain emerge not from any single, uniformly structured connectionist network but from highly evolved arrangements…

      9. Tom on Are Large Language Models (LLMs) capable of producing new concepts ? Palestine/Israel: the entangled narratives paradoxThursday, September 26, 2024

        When the entangled narrative is based on the Bible, the problem is the Bible.

      10. Paul Jorion on An Ambitious Project I. Making a choice: Claude’s consciousness and mineThursday, July 18, 2024

        I intend to read the Krichmar paper, thanks for mentioning it. I looked in my library, I’ve got a 1987…

      Most recent posts

      • How I discovered the mechanism of consciousness … in 1999 – Episode 9. Does sensory deprivation confirm the cross-flow resonance theory of consciousness (CFRT)?
      • How I discovered the mechanism of consciousness … in 1999 – Episode 8. “The Holographic Present: A Primer of a Cross‑Flow Resonance Theory of Consciousness”
      • Unilog 2022 – What makes a demonstration worthy of the name?, now on arXiv
      • How I discovered the mechanism of consciousness … in 1999 – Episode 7. A Synthetic Article on a Cross-Flow Resonance Theory of Consciousness
      • How I discovered the mechanism of consciousness … in 1999 – Episode 6. Inertia in the advancement of knowledge

      My books

      L'avènement de la singularité
      Humanism and its Discontents
      Comment sauver le genre humain
      Comment sauver le genre humain
      Un objet populiste mal identifié
      Mes vacances à Morro Bay
       Défense et illustration du genre humain
       À quoi bon penser à l'heure du grand collapse ?
       Vers un nouveau monde
       Se débarrasser du capitalisme est une question de SURVIE
       Le dernier qui s'en va éteint la lumière
       Penser tout haut l’économie avec Keynes
      Penser l'économie autrement
      Comprendre les temps qui sont les nôtres 2007-2013
      La survie de l'espèce
      Misère de la pensée économique
      La Guerre civile numérique
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