25 May 2016
In this lecture, Michael Thompson will examine the hypothesis that there are different “seasons of risk”, for each of which financial sector actors should apply different and appropriate risk-handling strategies.
Conventional diagnoses of the Global Financial Crisis see it as "abnormal", and then resort to explanations in terms of "irrational exuberance", "animal spirits", "herding behaviour" and so on. The prescription - "better regulation" - follows automatically, as it has done after every such crisis, all the way back to tulipmania 400 years ago. But if there are different "seasons of risk" (moderate, boom, bust and uncertain), and if financial sector actors are able to latch onto different risk-handling strategies (manager, maximiser, conservator and pragmatist), each appropriate to one of those seasons and inappropriate to others, then we have a very different explanation.
This is a simple and bold hypothesis - one that has its roots in Mary Douglas's How Institutions Think, and Purity and Danger. The lecture will show how it is well-supported by historical evidence, agent-based modelling, and fieldwork among both BOFIs and their regulators, as well as by parallels from ecology (Buzz Holling's "ecocycle": climax community, pioneer community, "cooperative fence-builders" and compost), organisation theory (Emery and Trist's four-fold typology of the causal texture of organisational environments) and evolutionary economics (Hyman Minsky's "stability is destabilising" sequence: investment, speculation, Ponzi and collapse).
This free public lecture will be held on Wednesday 25 May at 6pm in the Archaeology Lecture Theatre, UCL Anthropology, 14 Taviton Street, London WC1H 0BW.
Last edited: 26 January 2017
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International Institute for Applied Systems Analysis (IIASA)
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