Workshop 17: The Madness of Crowds, Policy Makers and Markets: A Brief History of Credit

Tuesday, May 2, 2017 -
10:20am to 11:10am

Session type:

Access to data and computing power has increased to the point where both are ubiquitous. Paradoxically, volatility has risen, not fallen, as information has become easier to gather and analyze.  Why is this so?  We believe it is due to inherent behavioral biases that are deeply imbedded in the human mind. Although our analytical tools have become more advanced, our ability to interpret and act on data in a rational manner remains the same as it always has—flawed.  This, in turn, creates opportunities for those who understand these biases to capitalize on those who suffer from them.  In this session, learn why cognitive behavioral factors are constant, leading to persistent excess volatility and inefficiencies; why policy makers suffer from the same cognitive biases, creating and amplifying asset price cycles; and how disciplined processes for allocating systemic risk can allow active investors to earn and keep excess return/avoid big mistakes