Tail Risk Killers: How Math, Indeterminacy, and Hubris Distort Markets

CHAPTER 26Risk and Regulation

Regulation is an instrument of government control. Sometimes it is benign, in the form of coordination. Coordination is necessary. Without coordination, streetlights are meaningless and getting to work every day would look like a war zone of crashed car pileups. Sometimes regulation is not benign. Either way, people accept this kind of regulation even if it is a form of coercion. At the extremes of regulatory order there are horrific things, such as tens of thousands of perfectly choreographed North Koreans, each with an identical iron grimace of forced joy, celebrating the dictator who is their puppet master. At the extreme of disorder, there is the equally horrific Cambodian mob that literally rips two government ...