Big Brains Can We Predict The Unpredictable? with J. Doyne Farmer
Nov 14, 2024
J. Doyne Farmer, a complexity scientist and professor at Oxford, once outsmarted casinos with his scientific insights. He dives into the intriguing idea of predicting economies like weather patterns, using chaos theory and big data. Farmer discusses the potential of agent-based modeling to revolutionize economic forecasting and addresses the challenges of understanding complex systems. He also highlights how complexity economics could reshape public policy, tackle climate issues, and pave the way for sustainable growth in our unpredictable world.
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Beating Roulette with Physics
- J. Doyne Farmer and his friends used physics to predict roulette outcomes, building a wearable computer to track ball velocity.
- They beat the house by 20% but didn't get rich due to fear of casino repercussions.
From Roulette to Stock Market
- Farmer's roulette experience led him to apply complex systems science to the stock market, founding Prediction Company.
- This company used complex models to achieve better than market average returns for 27 out of 28 years.
Complexity Economics vs. Traditional Economics
- Complexity economics models real-world behavior using agent-based simulations, unlike traditional economics' rational actors.
- This approach allows for incorporating bounded rationality and heuristics into economic models, improving predictive accuracy.
