CMPLXSYS 391 Chapter 1: Ch.1Notes
21 Sep 2016
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Document Summary
Models win when they are compared to people because they satisfy logical consistency. There is widespread use of models throughout all disciplines. Logic- causal effects and aggregative phenomena (no data needed) Predicts- better predictions (can"t be done w/o data) Explain- explain empirical phenomena (can"t be done w/o data) Act- guide policy and make strategic decisions (benefits from data but it is still useful w/o the presence of data) Lehman brothers models was used to see how much money was needed to keep various financial firms alive, and models of the financial network. Aig had stronger ties to the market when compared with lehman. So it was determined that lehman brothers could fail without it having strong detrimental effects on the economy but if aig were to fail the effects would destroy many other relevant banks. Design- helps to design institutions, policy, and rules (benefits from data, but is still useful w/o the presence of data)
