Illusion of control : why financial crises happen, and what we can (and can't) do about it / Jon Danielsson.

Format:

Book

Author/Creator:

Daníelsson, Jón, author.

Contributor:

Lippincott Library Book Endowment Fund.

Language:

English

Subjects (All):

Financial crises.

Financial risk.

Physical Description:

vii, 276 pages : illustrations ; 24 cm

Place of Publication:

New Haven : Yale University Press, [2022]

Summary:

Finance brings prosperity and danger. We use measurements of risk to try and control the dangers of investments while maximizing our growth. Current strategies rely on mathematical techniques and historical data to predict future risk, but ignore the human component, failing to take into account the nature of risk inherent in the system. Jon Danielsson argues that critical risk is generated from within, through the interactions of individuals and perpetuated by their beliefs, objectives, abilities, and prejudices. He asserts that the widespread belief that risk originates outside the financial system frustrates our ability to measure and manage it, and the likely consequences of new regulations will help alleviate small-scale risks but, perversely, encourage excessive risk taking. Danielsson uses lessons from past and recent crises to show that diversity is the best way to safeguard our financial system.

Contents:

Riding the tiger

Systemic risk

Groundhog day

The risk panopticon

The myth of the riskometer

Ideas matter : risk and uncertainty

Endogenous risk

If you can't take the risk, change riskometers

The goldilocks challenge

The risk theater

The uniformity, efficiency, and stability trilemma

All about BoB : robots and the future of risk

The path not to take

What to do?

Notes:

Includes bibliographical references (pages 259-265) and index.

Local Notes:

Acquired for the Penn Libraries with assistance from the Lippincott Library Book Endowment Fund.

ISBN:

9780300234817

0300234813

OCLC:

1269093491