This article argues that the crisis of 2007–2008 happened because of an explosive combination of agency problems, moral hazard, and “scientism”—the illusion that ostensibly scientific techniques would manage risks and predict rare events in spite of the stark empirical and theoretical realities that suggested otherwise.
Conclusion: “The captain goes down with the ship; every captain and every ship.” Nobody should be in a position to Continue reading Black Swan Taleb: bad math and the misundersting of risk caused the financial meltdown
