Assumption Quote by Avinash Persaud
“The technical explanation is that the market-sensitive risk models used by thousands of market participants work on the assumption that each user is the only person using them.”
About This Quote
Source Book: Market Risk Modeling, 2018
Risk models assume each participant acts independently, ignoring collective behavior that can affect outcomes.
In simple terms: Models ignore user interaction
Key Takeaway
Account for collective market dynamics
Themes
risk
modeling
interdependence
Mood
analytical
cautious
Type
technical
educational
When to use this quote
- trading strategies
- regulatory policy
Key Concepts
systemic risk
behavioral finance
Questions to Reflect On
- How does user interdependence affect risk?
- What adjustments improve model realism?
A Different Perspective
Assuming isolation can cause mispricing.
