They really aren’t out to get you, George

There’s an interesting article in the London review of books this week by Slavoj Zizek. It quotes the Commandments of Liberal Communism (original from Technikart magazine): 1. You shall give everything away free (free access, no copyright); just charge for the additional services, which will make you rich. 2. You shall change the world, not […]

Throwing out the rubbish is the hardest thing

Time and time again it strikes me that much software would be improved by asking the question at the design state `when do we expect to throw this way’ and budgeting for that. How often do you have to deal with a plain out-of-date system that is absorbing massive amounts of its creators effort simply […]

The Local Meme, Part II

Plato was an aristocrat: the idea that you could know everything, that you sat, imperial, having information delivered to you, was completely natural. Perhaps if epistemology had started on a different track, it would not now be so challenged by finding that this model isn’t the way nature seems to work. For now at least, […]

The Local Meme, Part I

A couple of years ago I was chatting to an acquaintance and, like many people, he was fascinated by quantum mechanics. I resisted the temptation to suggest he learn about Hilbert spaces before trying understand the theory of observation in QM (so, right, you take this operator wotsit, and you apply it to the state […]

The Price of Obscurity

What price knowledge? Recent graduates may have difficulty attributing any positive value to this commodity, but I want to be more specific – what is it worth to conceal your position? A good example of this question comes up in the liquidity market. Suppose you are a bank and you need to raise 10B euros […]

The Game of Monetary Policy

Given the budget is close, let’s talk Economics. Here’s a model of how to win a Nobel prize in that esteemed discipline. Come up with a macro economic theory, publish it, have it suffiently well accepted that governments use it to set monetary policy. This is difficult, of course, but at least the programme is […]

Bigger and better?

I have just got a new display for my computer, a deliciously big, high res LCD panel. And there’s just one problem, a problem I didn’t anticipate. My pictures don’t look nearly as good on it. It’s the resolution. At 1024×768, my old resolution, it’s easy to find a nice looking desktop, for instance. But […]

Good going on bad

Why are expensive hotels so dissatisfying? Thanks mostly to my job, I have had the opportunity to stay in a variety of not-cheap hotels around the world, and overall, the experience is much worse than staying in budget places. The problem is they promise so much: in a cheap hotel, you are grateful for a […]

Market success, market failure

Liquidity is a coming theme in the financial markets. It is not the same thing as volume or turnover: having liquidity means you can sell something when you want to, not just in ordinary market conditions. There are signs that, despite rising volumes, liquidity (in this sense at least) is decreasing: Avinash Persaud uses the […]

Just one word

I’ve just installed Office 2003 and, to be fair, it was incredibly straightforward. Insert disc; enter serial; wait; done. For what is one of the most complex pieces of software commonly available, that is pretty impressive. Unfortunately, that’s where the problems start. I had forgotten how much `I know better than you’ there is about […]

Taxing problems

One last example from Finance, and I promise I’ll talk about something else next. But an article in today’s paper made me think again about the tax system and how silly the rules are. It’s not that I think taxes are too high, or too low for that matter – it is just that the […]

Getting paid for Gaming

Suppose you are a trader in an investment bank. Suppose the world is fair, so you get paid for every pound you make over your budget. In options terms, that means you have a call on the P/L struck at the budget. How do you increase the value of a call? One way is to […]

Why two strategies are often better than one

Suppose you’re playing poker. You look at the cards on the table, and those in your hand. You can’t be beaten. So you raise. Corporate strategy discussions use lots of analogies like that, and they can be helpful. But what they hide is the fact that in the real world, we very rarely have complete […]

Actuarial Advice, Part II

Now my point in Part I was not to be the latest in a long line of people to point out how foolish the actuarial assumption of equity returns being 10% forever are. Rather, it is that the rules of the system have produced the behaviour. If you set things up so that you are […]

Actuarial Advice & How It Serves Us, Part I

Pensions are hot, possibly for the first time ever. There is a lot of press comment about underfunded pension funds and many people are becoming aware that their retirement may not be as comfortable as they had hoped. So it is not a bad time to look at one of the systems which underlies pensions, […]

Wake up and smell the coffee?

Firstly an apology for the dreadful pun. This blog is going to be about systems thinking and games in the large: rule-based systems and their behaviour. Part of the motivation for the name came from thinking about one of my favourite caf├ęs, Dal Professore in Naples (try the Nocciolato, it’s great). In most large Italian […]