Are financial markets too complicated for mathematical analysis?

Here’s a really interesting article from MIT’s Technology Review on how the math folks (called quants) may have inadvertently caused the recent Sub-Prime crisis. The article was picked up by one of my graduate students, Mike Cloud…it’s well worth reading. Left unsaid is the question of what role individual neural behavior plays in the behavior of markets (that’s the place of neuro-economics) although from this article’s perspective it’s more and more indirect: humans create the algorithms that place the trades automatically.

Jim