Brilliant post Traden4Alpha! There is indeed a very close relationship between 'numerical' mathematics and programs. Each expression and each proof can be seen as a program. An expression is a product of some formal language. A proof is a list of transformations, subject to logical rules. This is why logic is at the heart of both mathematics and computer science.Classical economics takes closed formulas and provides numerical solutions. I studied economics and I found quite dull. Most economists don't bother about testing the theories using economectrics or empirical tests in general. Instead there are extremely fond of toyproblems, weird assumptions and simple closed systems. Most theories in economics are much to local to explain anything; most of the time they should be seen as mere ideas of how to think about a set of problems. Of course there are not to blame, because up to fairly recently the tools and the paradigm of complex systems was almost completely unheard of.-------One point to think about is IMHO if and how traders/quants use economical theory at all. My guess is they mostly don't, because it is too complex, too much work. But, on the other hand companies are often the driving force of innovation (think about computer chips e.g.), because they have much more resources (people&capital&knowledge). I think that traders have much more knowledge about price fluctuations and anomalies than any scientist. But if they don't share their knowledge, every trader has to start from zero. The main difference between a trader and a scientist is that the trader is maximizing his profit and therefore significance of very specific forecasts, whereas the scientist is maximizing the significance of a wide variety of forecasts.
Last edited by yabbadabba
on January 18th, 2007, 11:00 pm, edited 1 time in total.