 Risk of loss towards an agent based modelSimone Pace ()
No 77, DEM Working Papers Series from University of Pavia, Department of Economics and Management Abstract: The financial world is basically divided in two: on one hand there are the experts, on the other hand the uninitiated. And, very often, it is a system that works: in very few (and very crazy) decided in fact to heal themselves, while the majority supports this division between secular and experts or specialists, going to the doctor in case of an illness, and getting a diagnosis and a cure that will put out the profane state of malaise in exchange for a financial benefit. The strange thing is, though, that in the economy not doing so. To better present the matter experts and laymen will consider them for what they have in common, their basic human and what separates them, the knowledge of the object. I will try to evaluate the effect of a greater knowledge on how to manage risk, as it is called the unexpected in the economy, and decisions arising therefrom, profane than the alternative. Experts and laymen in this chapter represent two different ways of approaching complexity: a top-down approach, with its strategy of op-posing the complexity as much complexity in the form of an elaborate theoretical framework, and a bottom-up approach, with the respective strategy of managing complexity through simplicity (which is, basi-cally, the daughter of complexity, as we'll see). Using the concept of epistemic arrogance, stemming from econom-ic’s practice of a science in which the points of view and the currents are sufficiently numerous to very often force themselves to such arro-gance as a defense mechanism, we’ll see its effects as a dynamic of authority-power, laying on human docility. This paper is substantially to be understood as an attempt to adapt the ecological agent-based modeling to a field that has, in my opinion, all papers in order to show, at least in theory (but I will try to use, whenever I can be, practical research, based on Nobel laureate Daniel Kahneman's research and sprung up in recent years in behavioral economics) the potential, from the philosophical point of view of epistemology of complexity, for a greater understanding and exploitation of the risk, providing major chances of comprehension and exploitation of risk intended as an effect of emergence, the main com-plex system’s feature. So I’ll see that there is, indeed, a constructive chance from the con-venience of the secular model of risk management, trying to re-evaluate the way it consciously ruling fallacious to proceed; this has been made trying to opposing, at the use of a highly complex knowledge making use of logical-mathematical sophistication to its progress, a hard-wired heuristic system, that is based on the principle of less-is-more, a source of transparency, robustness, and cognitive fluidity: characters whose importance is too often overlooked, especially in econometric’s research. Keywords: Agent-based economics; heuristics; qualitative economics (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pav:demwpp:demwp0077 Access Statistics for this paper More papers in DEM Working Papers Series from University of Pavia, Department of Economics and Management Contact information at EDIRC. |
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