In the autumn of 1998, a hedge fund called Long-Term Capital Management lost roughly $4.6 billion in about four months and had to be unwound by a consortium of banks assembled at the Federal Reserve's request, for fear its collapse would take the rest of Wall Street down with it. The fund's principals included two … Continue reading The Difference Between Being Tested and Being Watched
Tag: game theory
Cheap Talk, Costly Feuds: A Pricing Theory of Status and Conflict
A hotel manager once told a marathoner he could run a six-minute mile. The marathoner — who had raced twenty-six miles at 7:35 pace and knew exactly what a six-minute mile costs a body — called bullshit. The manager didn't retreat to "well, in high school." He doubled down. Nothing about that exchange makes sense … Continue reading Cheap Talk, Costly Feuds: A Pricing Theory of Status and Conflict
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