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Fat Tail Notes series continues with cost of broken promises
Original: Part 24 of the Fat Tail Notes series — the price of breaking a promise. The hook Part 23 priced the policy loophole and
Part 24 of the Fat Tail Notes series is out, continuing the analysis from Part 23, which found that a 10% exemption expectation erases 64% of a financial backstop's protective damage. The new instalment examines the price of breaking a promise, questioning whether the exemption rate can really be treated as fixed by the market rather than chosen by policymakers.
Why now: Readers of the series are following the ongoing mathematical breakdown of how policy credibility affects financial backstops.
Evidence
- Part 24 of the Fat Tail Notes series — the price of breaking a promise. The hook Part 23 priced the policy loophole and found the cliff: a 10% exemption expectation eats 64% of the backstop's damage. But that model treated the exemption rate p as something the market just… · hackaday@www.urbanmind.net · 3
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