Benoit Mandelbrot has passed away (HT - Tyler Cowen). Best known for the iconic Mandelbrot set and his work on fractal geometry, he also had a lot to say about the complexity and fragility of financial markets, and the importance of large rare events ("fat tails") in these markets. A lot of people I engage with learned to appreciate complex systems and the economy from Hayek. I first learned to appreciate them from Mandelbrot, Soros (Alchemy of Finance - contra Fox News, Soros doesn't just spend his time wrecking foreign currencies and funding liberals... he's written several good books too and bankrolled democratic movements in Eastern Europe), the Santa Fe Institute, etc.. I'm not deeply familiar with this literature (Soros is the only one I've ever read at any length) - but Mandelbrot/Soros/Santa Fe got me on to Krugman and what he's written about emergent processes (this was my introduction to Krugman, in fact). I think this chain of influence is a large part of the reason why I find Hayek so much more useful and interesting than Mises. Anyway, there are many roads to complexity and emergent behavior (it would seem to contradict complexity theory if there weren't, wouldn't it?) and I always find it interesting that some people seem to think the Austrian path is the only way there. Sorry - that was something of a tangent, I know. This is Mandelbrot on the Efficient Market Hypothesis - the heart of his argument is at 7:15:
Hrmm I never had considered the madelbrot set as the probability curve... now I see it. Heads - tails - and everywhere in between. Fat Tails LOL total sense. Because the branches don't start fat they start at nearly not even there like infinitely small if you can drill down in detail far enough... single large events.
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