Theory and Reality --- Some Quotes and Comments (an Essay Shell)

"In the end, a theory is accepted not because it is confirmed by conventional empirical tests, but because researchers persuade one another that the theory is correct and relevant." --- Fischer Black (1986), quoted by E. Derman at a CMU Lecture, October 2002.

"There is no sense in being precise, when you don’t even know what you’re talking about.'' ---- physicist, mathematician, economists, and proto-computer scientists John von Neumann, quoted by professional gambler Barry Greenstein in his autobiography Ace on the River.

Psychologist Dean Radin suggested that academic acceptance of an idea goes through four stages that can be characterized by the comments:

    1. "It's impossible."
    2. "Maybe it's possible, but it's weak and uninteresting."
    3. "It is true and I told you so."
    4. "I thought of it first."
    5. Ellen J. Langer has now added "We always knew that. How could it be otherwise?"

This pattern seems to fit to a tee the way that the world has come to accept the dependence of asset returns as reflected by the conditional heteroskedasticity described by GARCH models.

"Reality is that which, when you stop believing in it, doesn't go away." --- Philip K. Dick

 

Incidentally, there is an element of disputed authorship about this quote which I would like to resolve. If you know the citation,please let me know. Incidentally, there is an excellent collection of quotations about reality.

 

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