To Understand Finance, Embrace Complexity

March 11 (Bloomberg) -- A highly unusual collaborationbetween economists and scientists offers an important insightfor those who want to fix the world’s crisis-prone financialsystem: There’s no simple way to understand a complex network.

This month’s issue of the research journal Nature Physicsfeatures a handful of papers in which physicists, other naturalscientists and leading experts in economics and finance --including prominent banking regulators and Nobel Prize-winningeconomist Joseph Stiglitz -- put their minds together to figureout finance. What the scientists bring to the table isexperience in studying networks, bewildering tangles ofinterlinked and interdependent things such as an ecological foodweb or the Internet.