In an interview published at the Enterprising Investor blog, Frank Fabozzi, a well-known researcher and author in the mathematical finance field, has sharply criticized the current state of academic economics and finance.
Here are some highlights:
The “rational models” constructed in economics and finance are increasingly disconnected from real-world behavior, as has been shown by research in behavioral finance. As Fabozzi and Sergio Focardi argued in 2012, “economics in its current form does not describe empirical reality but an idealized rational economic world.”
The problem with relying on “rational
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