The End of Theory: Financial Crises, the Failure of Economics, and the Sweep of Human Interaction (a review)

Book Reviews
October 2017 | Vol. 12 | No. 1 | 1 page
Source: CFA Institute
Richard Bookstaber
Robert N. Farago, ASIP (Reviewer)


The author proposes agent-based modeling as a method for managing risk in a complex system, providing clear, non-technical explanations for the concepts of the “four horsemen” that together help us understand why traditional risk models fail in a crisis. He describes the complexity spectrum, ranging from deterministic mechanical systems to strategic complexity with its competing agents. This book is not a how-to guide but a thought-provoking challenge to the use of models in economics and, by extension, fund management.

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