Andrew Lo and Mark Mueller within the MIT have a document called "warning: Physics envy can be hazardous to your Wealth," also available as a video.? The takeaway, which is also relevant to the development of Finance (the real subject of the talk), is the inability to recognize the radical uncertainty is what leads to excessive confidence in mathematical models of reality and bad politics prediction then.
Imagine how much more difficult if the electron had feelings physics!(Feynman r.)
The key concept of this document is to define a continuum of uncertainty less radical than radical.Vous get problems when you think there is a higher level of certainty that it really is.
1 Certainty full
2 Risk without uncertainty (random when you know the exact probability distribution)
3 Full reducible to uncertainty (result set, known model and lots of data, known classical statistical technical assumptions adjustments, so you can get arbitrarily close to type 2).
4 Partially reducible to uncertainty ("model uncertainty": "we're in a casino that may or may not be honest and rules tend to change from time to time, without notice.")
5: Irreducible uncertainty: complete ignorance (refer to a priest or astrologer)
Envy physics developing leads you to believe that you are type 2 or type 3, when you really are type 4.It feeds the futile search for great unifying theory of development.
Type 4 "model uncertainty" seems more probable in development in the financial field, theory is much more developed and produces more accurate assumptions in the latter case than in the first case (but, I'm not so skeptical to believe that we are in the type 5 in the development).
What to do on the uncertainty in the development? obviously not a question can be answered in a sentence. maybe we can start by discussing the social systems that enable decentralized agents to solve their own problems this feature less uncertainty and doesn't require any agent centralized to uncertain whole model of the entire system.
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