Very Cool Idea Applied to The Current Economic Situation

One of the most creative teams in the intellectual history of economics that I know of is my colleague David Levy and Sandra Pert, the Dean of the Jepson School of Leadership Studies at the Univeristy of Richmond.  He actually testified on Sunday about their idea of "Expert Bubbles."  This idea may very well explain the mechanism at work under the perverse incentives created in the financial services industry.

Comments

[Bogdan Enache]

The idea of expert biases sounds interesting, but there's also the basic question of limited competition (due to multifarious government involvement) in the market of credit-rating and audit agencies that can be blamed for the perversed incentives pointed out.

[Roger Koppl]

Thanks for posting that one, Pete. Peart & Levy's argument is important to understanding the current crisis. Their work on experts is important stuff in general. It goes to some central issue on the production and distribution of knowledge in society.