"Humans may be more sophisticated than animals, but we are nevertheless animals, subject to the same kind of forces that nature has built into all of creation," says MIT Sloan Prof. Andrew Lo of behavior affecting adaptive markets.
This story on a recent paper co-authored by MIT Sloan Prof. Andrew Lo describes his proposal for a five-tiered organization of uncertainty to more effectively understand and calculate risk in economic systems.
"What we thought was diversified became very highly correlated because of the global integration of the financial markets. Assets we thought were uncorrelated have moved together, so we have to be much more thoughtful about asset allocation," says MIT Sloan Prof. Andrew Lo.
"The traditional approach in stocks, bonds, and funds is no longer enough. To get by, you have to invest in currencies, commodities, real estate and private equity as well as in long and short strategies," says MIT Sloan Prof. Andrew Lo in this interview.
"Economics evolve, dictated by the behaviours of individuals, who learn from experience and positive feedback," explains MIT Sloan Prof. Andrew Lo in a story on the use of biological ecology principles in financial models.