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fact that the group’s ship hadn’t capsized in the past didn’t guarantee that the group had properly calculated the odds of a tidal wave—just that such waves were relatively infrequent. Merton’s theories were seductive not because they were mostly wrong but because they were so nearly, or so nearly often, right. As the English essayist G. K. Chesterton wrote, life is “a trap for logicians” because it is almost reasonable but not quite; it is usually sensible but occasionally otherwise: It looks just a little more mathematical and regular than it is; its exactitude is obvious, but its ...more
When Genius Failed: The Rise and Fall of Long-Term Capital Management
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