Tuesday 28 April 2009

Political fat tails

Probability distributions didn’t do a great job predicting financial meltdown, and we’re not sure they’ll be much better at predicting general events. But, since it’s not far-fetched to think that political extremes can follow economic ones, for what it’s worth, here is the political application of fat tail risk.

Risk consultancy Eurasia Group is exploring the “increasing likelihood of radical political disjunctures”, or fat tail events in national-level politics.

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