Amar Bhide on Hayek, Innovation & Entrepreneurial Judgment

In The Harvard Business Review. Highly recommended.

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One Response to Amar Bhide on Hayek, Innovation & Entrepreneurial Judgment

  1. fundamentalist says:

    Interesting article, but I have to disagree with Bhide. Statistical models are not pure representations of the past; they embody the assumptions and theory of the modeler about how the past worked. Had the same models been built on Austrian assumptions and theory, they would have served the user much better.

    Take the credit score models. They did nothing but automate the theory of certain lenders about credit. Any mortgage lending officer could have ignored the models and implemented the same theory manually and the outcomes would have been just as wrong.

    Statistical models are only as good as the assumptions/theory behind them. Don’t blame the modeling process or the models, blame the theory behind them.

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