A unique examination of the limits of models and theories in understanding and predicting human behavior, and a nice...
A fascinating cross-disciplinary exploration of how and why financial and scientific models fail.
Derman (Financial Engineering/Columbia Univ.; My Life as a Quant, 2004) is a former theoretical physicist turned Wall Street financial engineer, or quantitative analyst (“quant”). Having previously written about the world of quantitative finance, he now sets out to discover why existing financial models failed to predict the economic crisis of 2007-08. Quants use mathematics and physics to create their predictions of how markets work; Derman argues that these models fail to account for the human element, or what John Maynard Keynes called “animal sprits.” Drawing on his experience as a child in Apartheid South Africa, the author exposes the failure of models and theories when applied to politics. By incorporating philosophy, physics, social theory and economics, he presents an eclectic, multidisciplinary discussion about what happens when models are taken too seriously and the human factor is ignored. “The greatest conceptual danger is idolatry; believing that someone can write down a theory that encapsulates human behavior and thereby free you of the obligation to think for yourself,” he writes. Derman draws intriguing connections between the language of physics and economics, and while the material may be complex for nonphysicists, the author’s prose writing is fluid and makes many of these complicated theories accessible.
A unique examination of the limits of models and theories in understanding and predicting human behavior, and a nice rejoinder to the equations-can-solve-or-explain-everything crowd.Pub Date: Oct. 25, 2011
ISBN: 978-1-4391-6498-3
Page Count: 240
Publisher: Free Press
Review Posted Online: Oct. 2, 2011
Kirkus Reviews Issue: Oct. 15, 2011
Poignant and funny.
A middle-class couple in “car-honking, no-YOU-shut-up Brooklyn” embarks on a three-year mission to seek the permanence of home ownership.
Journalist Williams loved her Carroll Gardens rental, but felt pressured as homeowning friends with appreciating equity ridiculed those who didn’t invest in real estate, asking, “What will it cost six months from now?” With limited savings for a down payment, the author and her husband desperately started looking for houses in Brooklyn, but in their price range found only dilapidated, termite-ridden buildings near highways and unsafe neighborhoods. Williams bitingly describes the search, reliving the hysteria at the height of the 2003–06 real-estate bubble: “Open houses are crowded and competitive, with brokers entertaining multiple suitors like Scarlett O’Hara at a party.” Without much of a plot engine to propel a repetitive, mostly unfulfilling search, the author opts for plumbing the psychological depths of her emotional history, explaining her tenacious need for a house and security in confessional, tell-all prose. Abandoned by her husband when she was six-months pregnant, Williams’ reluctant mother is a chronic worrier and inappropriate confider who says things like, “You have no idea how incredible it is to have grandchildren…It’s so different than what you feel for your own child.” The author shows New York rapidly becoming affordable only for the extremely rich, while the middle-class gets squeezed out to the suburbs. Along the way, she patiently explains such real-estate idioms as staging, no-doc mortgages (“a lending version of ‘don’t ask, don’t tell’ ”) and interest-only loans. Although the author’s mantra was to go for what you want, no matter how unobtainable it seemed, eventually she compromised and settled for a lower-priced home in Inwood, on the northern tip of Manhattan, close to the Cloisters and a beautiful park.
Poignant and funny.Pub Date: March 1, 2009
ISBN: 978-1-4165-5708-1
Page Count: 320
Publisher: Simon & Schuster
Review Posted Online: May 19, 2010
Kirkus Reviews Issue: Jan. 15, 2009
BOOK REVIEW
The occasional distractions of pop-business cheerleading notwithstanding, if the book evokes a few creative ideas, it will...
Why think outside the box? Write business consultants Coyne and Coyne, “the key is to find just the right box in which to think.”
Readers may not have known that a famed Broadway producer, responsible for such hits as The Lion King and Beauty and the Beast, was also the father of the corn maze, an idea whose time, it seems, had come when he hit on it back in the ’90s. Corn mazes are now a big draw in some parts of the country, though the authors must be using faulty stats to set the number of visitors at twice that of the Grand Canyon. Why couldn’t we think of that contribution to American civilization? We can, write the authors—it’s mostly a matter of learning how to ask lots of questions that might generate the desired answer, which presumably is to hit it rich, in the manner of the “Z-1-4” (“zero to $1 billion within 4 years”) businesses they profile here. Enter “Brainsteering,” a gimmicky but, at least on the face, effective method for “consistently generating breakthrough ideas.” It would steal the authors’ thunder to describe this method too closely, but let’s take, for instance, their thoroughly useful series of questions meant to help pick out a welcome gift for the person who may have everything: “What was their favorite toy, hobby, or activity during the period of their life on which they look back most fondly?” “What event or accomplishment in their life are they most proud of”? The authors pepper their narrative with such idea-sparkers, with an appendix that is worth the cover price, and introduce acronym-tagged concepts that seem as if they ought to bear fruit, as with the notion of a “mutually exclusive and collectively exhaustive” system of investigation.
The occasional distractions of pop-business cheerleading notwithstanding, if the book evokes a few creative ideas, it will have done good service.Pub Date: March 1, 2011
ISBN: 978-0-06-200619-6
Page Count: 256
Publisher: Harper Business
Review Posted Online: Dec. 23, 2010
Kirkus Reviews Issue: Dec. 15, 2010
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