Resources



The Modelers' Hippocratic Oath

Emanuel Derman and Paul Wilmott January 7 2009

  • I will remember that I didn’t make the world, and it doesn’t satisfy my equations.
  • Though I will use models boldly to estimate value, I will not be overly impressed by mathematics.
  • I will never sacrifice reality for elegance without explaining why I have done so.
  • Nor will I give the people who use my model false comfort about its accuracy. Instead, I will make explicit its assumptions and oversights.
  • I understand that my work may have enormous effects on society and the economy, many of them beyond my comprehension.

Books

Miscellaneous

Behave: The Biology of Humans at Our Best and Worst

Robert M. Sapolsky

Human behavior explained at all levels: from the working of a single neuron to the intricacies of human culture.

Chaos: Making a New Science

James Gleick

Determinism does not mean predictability. Small differences in model parameters produce radically divergent predictions, so any attempt to anticipate complex systems with precision becomes futile.

Future Babble: Why Pundits Are Hedgehogs and Foxes Know Best

Daniel Gardner

When predicting the future, the more certain the person, the more likely he or she is to be wrong. A cautionary tale on the over-reliance on business plans and forecasts.

Bad Science

Ben Goldacre

An skeptic’s guide to media coverage of scientific studies. Teaches about the importance of the placebo effect, double-blind studies, and sample sizes, so that bad science is easy to recognize.

Predictably Irrational

Dan Ariely

A behavioral economics book describing surprising experiments which contradict the layman’s assumptions on the degree of rationality people use when making decisions. The rational expectations theory breaks down, meaning that markets are inefficient and leaving plenty of room for “free lunches”.