Posted by: Alexandre Borovik | September 18, 2008

0-1 Law

A quote from Anatole Kaletsky in Times Online:

The wonder of financial crises is how events can move straight from impossible to inevitable, without ever passing through improbable.

In mathematics this type of statements is called “0-1 laws”.

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Responses

  1. i don’t think so. 0-1 laws are statements about phase transitions. this financial stuff is better described as the up and down swings of random walks.

    or is it to geeky of me to nitpick about this?

  2. All 0-1 laws involve only entities involving infinity in some disguise. The analogy with crises could be justified if we assume non-atomic players, or infinite capital, or some other kind of unfeasible assumptions.

    Or the infinite greediness/stupidity/irrationality of players :-)


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