The Four Horsemen of the Econopocalypse

The video features a discussion with the Chief Risk Officer at the University of California Board of Regents about his book, 'The End of Theory'. It critiques standard economic models, especially during crises, and introduces agent-based modeling as a more effective approach. The discussion covers the limitations of traditional economics, the concept of the Four Horsemen of the Econopocalypse, and the role of liquidity providers like Maiden Lane facilities. The speaker argues for a shift from theoretical models to narrative-driven approaches in complex systems.

What is the main critique of standard economic models during crises?

• They assume all agents are different.

• They rely too heavily on historical data.

• They are too focused on short-term predictions.

• They do not account for individual decision-making.

Which of the following is NOT one of the Four Horsemen of the Econopocalypse?

• Predictable outcomes

• Radical uncertainty

• Emergent phenomena

• Computational irreducibility

What does 'emergent phenomena' refer to in the context of economic crises?

• The ability to forecast future events accurately

• Unexpected macro results from individual actions

• Predictable outcomes from individual actions

• The stability of economic systems over time

What is the proposed alternative to neoclassical economics during crises?

• Agent-based modeling

• Behavioral economics

• Classical economics

• Game theory

In agent-based modeling, what do the 'agents' typically represent?

• Economic theories

• Government policies

• Mathematical equations

• Individual decision-makers

What role did the Maiden Lane facilities play during the 2008 financial crisis?

• They provided loans to small businesses.

• They acted as liquidity providers of last resort.

• They regulated interest rates.

• They offered tax incentives to investors.

Who are suggested as potential liquidity providers of last resort in future crises?

• Individual investors

• Pension funds and sovereign wealth funds

• Hedge funds

• Central banks

Why are pension funds and sovereign wealth funds considered suitable as liquidity providers?

• They are regulated by the government.

• They have large capital and long-term horizons.

• They are highly leveraged.

• They have short-term investment horizons.

What is the significance of the book title 'The End of Theory'?

• It suggests a shift from theoretical to practical approaches.

• It indicates the end of economic studies.

• It promotes the use of more complex mathematical models.

• It argues for the elimination of all economic theories.

What is meant by 'strategic complexity' in financial markets?

• The elimination of all market complexities

• The creation of complexity for individual benefit

• The reliance on government interventions

• The use of simple strategies for market stability