Santa Fe Institute

How complex systems science helps reveal market behavior

Nov. 11, 2013 8:30 a.m.

SFI Board of Trustees Chair Michael Mauboussin, in Elliott Turner's blog "Compounding My Interests," describes how complex systems science and SFI have influenced his approach to investing and business. Mauboussin is Managing Director for Global Investment Strategies at Credit Suisse.

He says he first heard about SFI at a Baltimore Orioles game he attended with SFI Board of Trustees Chair Emeritus Bill Miller. "[Miller] was taken with Brian Arthur’s work on 'increasing returns,'" Mauboussin says. "This work showed that under some conditions returns actually move sharply away from the mean. This is counter to classic microeconomic thinking that assumes returns are mean-reverting."

Mauboussin adds that ideas from SFI have permeated every aspect of his work "from understanding power law distributions in social systems to network theory to collective decision making to the processes underlying innovation. I could go on. But suffice it to say that there is hardly an area of markets, business, or decision making where your thinking wouldn’t be improved by learning, and internalizing, the kinds of ideas coming out of the SFI."

Read the interview on Compounding My Interests (November 8, 2013)

Read Turner's October 16, 2013 post about SFI's Business Network topical meeting on risk and the limits of forecasting

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