Summary of Lecturing Birds on Flying
Can Mathematical Theories Destroy the Financial Markets?
In finance, theory has become so divorced from practice that it is no longer relevant.
This is a passionate attack on quantitative financial theory and its influence on business schools and the managers of financial institutions. Financial theorists, Pablo Triana says, are like ornithologists whose birdbrained formulas can’t even come close to approximating the experience of flight. If you have maintained a regular acquaintance with advances in the financial markets, for example, by reading newspapers, you may already be familiar with Triana’s analysis. He relies heavily on the ideas of Nassim Taleb and Emanuel Derman, who explain that people who have experienced improbable events overestimate the chance that such events will recur, while others underestimate it. In this rambling overview, Triana also refers to some of his own previous analyses. He presents a forceful summary of the problems with mathematical economic models. getAbstract finds that he offers good and valuable insights, though not necessarily innovative ones, and recommends his book to investors, financial analysts and thick-skinned economists.
In this summary, you will learn
- Why quantitative financial theory is bunk;
- Why business schools are impractical and largely irrelevant to business; and
- What skeptic Nassim Taleb says about theoretical finance.
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