Quants, physicists working on Wall Street as quantitative analysts, have been widely blamed for triggering financial crises with their complex mathematical models. Their formulas were meant to allow Wall Street to prosper without risk. Models.Behaving.Badly. Though such models imitate the style of physics and employ the language of mathematics, theories in physics aim for a description of reality--but in finance, models can shoot only for a very limited approximation of reality. But in this penetrating insider's look at the recent economic collapse, Emanuel Derman--former head quant at Goldman Sachs--explains the collision between mathematical modeling and economics and what makes financial models so dangerous. exposes Wall Street's love affair with models, and shows us why nobody will ever be able to write a model that can encapsulate human behavior.About the Author:Emanuel Derman is a professor at Columbia University and Director of the university's program in financial engineering. Now in paperback, "a compelling, accessible, and provocative piece of work that forces us to question many of our assumptions" (Gillian Tett, author of Fool's Gold). Derman uses his firsthand experience in financial theory and practice to explain the complicated tangles that have paralyzed the economy. Until his retirement in 2002, he spent sixteen years at Goldman Sachs as a quant.
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Models. Behaving. Badly.: Why Confusing Illusion With Reality Can Lead To Disaster, On Wall Street And In Life, Paperback - Emanuel Derman
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