[FRIAM] A) B) C) and D) and a little bit of E) : Bernanke's Financial Modeling Technology

[Dale Schumacher]

On Sat, Oct 4, 2008 at 12:58 PM, Steve Smith <sasmyth at swcp.com> wrote:
> I don't think any of us believe that our "esteemed leaders" don't fit into
> one (or both) of the two following categories:
>
> Willfully ignorant
> Sadly ignorant

I think you're being too generous.  I'm afraid that many fall into a
category I'll call "Maliciously aware".  Usually I prefer to assume
ignorance rather than malice when ignorance provides sufficient
explanation.  However, I think we have to consider the real
possibility that many decision-makers are perfectly aware of the cost
of their actions to others, but are only concerned with the benefit to
themselves (and those close to them).

> Greenspan *had* to know that he was presiding at a series of dedications of
> a house of cards (Willfully pretending ignorance).

Here you seem to agree that true ignorance may not be the issue.  We
have a system where certain players can reap short-term gains without
being held accountable for long-term losses.  I'm sure there are
individuals on this list with more game-theory or behavioral-incentive
knowledge that could elucidate the mechanisms better than I.

The most frustrating part is that I simply don't know what can be done
about it and how I can help.  I can choose to act in what I believe is
a more moral way, guided by "enlightened self-interest", but that
doesn't have much effect on the system as a whole.