Bieta, VolkerMilde, HellmuthWeber, Nadine2012-03-192012-03-192010-12-01https://hdl.handle.net/10986/3980The authors of this paper claim that modeling financial markets based on probability theory is a severe systematic mistake that led to the global financial crisis. They argue that the crisis was not just the result of risk managers using outdated financial data, but that the employed efficiency model -- also referred to as the stochastic model -- is basically flawed. In an exemplary way, the analysis proves that this model is unable to account for interactions between market participants, neglects strategic interdependences, and hence leads to erroneous solutions. The central message is that the existing efficiency model should be replaced by an approach using agent-based scenario analysis.CC BY 3.0 IGOACCOUNTINGAGENCY PROBLEMSAMOUNT OF CAPITALASYMMETRIES OF INFORMATIONBANKING INDUSTRYBANKING SECTORBENEFICIARYCASH FLOWCASH FLOWSCOLLATERALCOLLATERALSCONFLICTS OF INTERESTCORPORATE FINANCECREDIT CONTRACTCREDITORDEBTDEBT FINANCINGDEBTORDECISION MAKINGDERIVATIVEDERIVATIVESECONOMICSEFFICIENT MARKETEFFICIENT OUTCOMESEQUITY FINANCINGFEDERAL REGULATORSFEDERAL RESERVEFEDERAL RESERVE SYSTEMFINANCIAL ASSETFINANCIAL ASSETSFINANCIAL CRISISFINANCIAL DATAFINANCIAL INSTRUMENTSFINANCIAL MARKETFINANCIAL MARKETSFREE MARKETSFUTURE CASH FLOWSGAME THEORYGOVERNMENT REFORMHIGH INTEREST RATEINFORMATION ASYMMETRYINFORMATIONAL ASYMMETRYINTEREST RATEINTEREST RATESINTERNATIONAL BANKLOW INTEREST RATEMARKET PARTICIPANTMARKET PARTICIPANTSMARKET PRICESMATURITYNASH EQUILIBRIUMPERFECT COMPETITIONPERFECT MARKETSPORTFOLIOPRICE TAKERSRANDOM WALKREAL ESTATERESOURCE MOBILIZATIONRISK NEUTRALSTATISTICAL DATASUBVENTIONSWEALTHWorld Bank10.1596/1813-9450-5498