Purposive Drift

A different beat

Doubt can be positive and profitable as Daniel Beunza explains in a piece about his three year study of a derivatives trading room that avoided the perils of the credit crisis by actively encouraged its traders to question their models and assumptions. (Incidentally, they also practised Bob Sutton's "No arsehole" rule.) Well worth a read. For a taster here is Beunza's conclusion:

"Our study suggests that a lack of reflexivity –that is, the lack of doubt on the part of banks– may be behind the current credit crisis. We are reminded of infantry officers who instructed their drummers to disrupt cadence while crossing bridges. The disruption prevents the uniformity of marching feet from producing resonance that might bring down the bridge. As we see it, the troubles of contemporary banks may well be a consequence of resonant structures that banished doubt, thereby engendering disaster."