Adaptive Markets · Financial Evolution at the Speed of Thought by Lo, Andrew W. -- Read -- Imperial Library of Trantor

Index

Title Page Copyright Page Dedication Page Contents Introduction

Financial Fear Factor Don’t Try This At Home The Great Divide “It’s the environment, stupid!” Revenge of the Nerds

Chapter 1. Are We All Homo economicus Now?

Tragedy and the Wisdom of Crowds A Random Walk through History The Birth of Efficient Markets Efficient Markets Unpacked What to Expect When You’re Expecting Efficient Markets in Action

Chapter 2. If You’re So Smart, Why Aren’t You Rich?

Rejecting the Random Walk Risk versus Uncertainty and the Ellsberg Paradox Losing Hurts More than Winning Feels Good No-Limit Texas Hold ’em, Rogue Traders, and Regulators Probability Matching and March Madness Humans as Prediction Machines It Takes a Theory to Beat a Theory Culture Shock

Chapter 3. If You’re So Rich, Why Aren’t You Smart?

Looking under the Hood The Microscope of Neuroscience Fear Pain Pleasure and Greed Wired-Up Traders The Stuff Good Traders Are Made Of Mind over Money via Neural Currency I Want It All, and I Want It Now

Chapter 4. The Power of Narrative

A New Meaning of Rationality The Human Fire Alarm and Sprinkler System The Fear Factor and Finance I Know You Know That I Know Homo economicus and the Left Hemisphere The Prefrontal Cortex as CEO The Power of Self-Fulfilling Prophecies Barbara Ficalora, the Best Third Grade Teacher Ever Narrative Is Intelligence

Chapter 5. The Evolution Revolution

A Day at the Zoo The Evolution Revolution Just-So Stories or Scientific Fact? The Power of Selection Variety Is the Spice of Life “It’s the environment, stupid!” The Emergence of Homo sapiens Enter Homo economicus An Evolutionary Pecking Order Swedish Twins and Savings Evolution at the Speed of Thought Sociobiology and Evolutionary Psychology Survival of the Richest?

Chapter 6. The Adaptive Markets Hypothesis

It Takes a Theory to Beat a Theory Simon Says Satisfice The Superman Jacket The Adaptive Markets Hypothesis Probability Matching Explained Nature Abhors an Undiversified Bet “It’s the environment, stupid!” All Over Again Homo economicus and Idiosyncratic Risk The Origin of Risk Aversion Efficient versus Adaptive Markets Waylaid by Physics Envy On the Shoulders of Giants

Chapter 7. The Galapagos Islands of Finance

Quantum Mechanics Mission Impossible The Islands of Evolution Hedge Fund Archipelago An Evolutionary History of the Hedge Fund The Birth of Quants The Revenge of the Nerds Quant Goes Mainstream The Evolution of the Random Walk Cell Phones and Kerala Fishermen

Chapter 8. Adaptive Markets in Action

The Traditional Investment Paradigm The Great Modulation A New World Order Risk/Reward and Punishment The Democratization of Investing New Species of Index Funds Smart Beta versus Dumb Sigma Disbanding the Alpha Beta Sigma Fraternity The Random Walk Revisited A New Investment Paradigm The Quant Meltdown of August 2007 Forensic Finance Adaptive Markets and Liquidity Spirals 1998 versus 2007

Chapter 9. Fear, Greed, and Financial Crisis

Ecosystem Ecology Financial Crisis 101 Clear as Rashomon Not Enough Skin in the Game? Regulators Asleep at the Wheel? Red Pill or Blue Pill? Could We Have Avoided the Crisis? The Adaptive Markets Hypothesis Explains (Ab)Normal Accidents Liquidity Withdrawal Symptoms

Chapter 10. Finance Behaving Badly

Finance Rules Out-Ponzi-ing Ponzi The Ultimatum Game A Neuroscience of Morality? Is Finance Fair? Finance and the Gordon Gekko Effect Regulatory Culture Environment Strikes Again Moore’s Law versus Murphy’s Law The Tyranny of Complexity

Chapter 11. Fixing Finance

An Ounce of Prevention Ecosystem Management Adaptive Regulation Law Is Code Mapping Financial Networks The CSI of Crises Privacy with Transparency Anti-Gekko Therapies

Chapter 12. To Boldly Go Where No Financier Has Gone Before

Star Trek Finance “Computer, manage my portfolio!” Curing Cancer Eliminating Poverty A New Narrative I Want To Be Harvey Lodish

Color Plates Notes References Acknowledgments Index