Talks

Physicists have been working for banks and hedge funds on applied problems in finance for more than two decades, and recently have doing academic research as well. This talk will survey academic research by physicists and contrast it with mainstream economics. I will argue that the difference comes not from the application of alternative techniques or new mathematics, but rather from fundamental differences in what questions are considered interesting and how one should go about solving them. This will be illustrated with a simple model for how systemic risks and extreme price movements are generated by the use of leverage (buying with credit). The current financial crisis illustrates that the economy is indeed a complex system, and that new approaches are needed that properly take this into account.

The calculation of soft supersymmery breaking terms type IIB string theoretic models is discussed. Both classical and quantum contributions are evaluated. The suppression of FCNC gives a lower bound on the size of the compactification volume. Essentially what is obtained is a sequestered theory with the dominant pattern of soft masses and gaugino masses being that expected from AMSB and gaugino mediation with a gravitino mass around 100TeV.

Bruno de Finetti is one of the founding fathers of the subjectivist school of probability, where probabilities are interpreted as rational degrees of belief. His work on the relation between the theorems of the probability calculus and rationality is among the corner stones of modern subjective probability theory. De Finetti maintained that rationality requires that an agent’s degrees of belief be coherent. I argue that de Finetti held that the coherence conditions of degrees of belief in events depend on their verifiability. On this view, the familiar constraints of coherence only apply to sets of degrees of belief that could in principle be jointly verified. Accordingly, the constraints that coherence imposes on degrees of belief are generally weaker than the familiar ones. I then consider the implications of this interpretation of de Finetti for probabilities in quantum mechanics, focusing on the EPR/Bohm experiment and Bell’s theorem.