The Gini coefficient remains a popular gauge of inequality throughout the social and natural sciences because it is visually striking and geometrically intuitive. It measures the “gap” between a hypothetically equal distribution of income or wealth and the actual distribution. But not all...

Despite the rise of multi-factor models emphasizing value, firm size, and momentum, beta remains the primary measure of risk in asset pricing. Designed to define systematic risk, net of idiosyncratic risk that can be neutralized through diversification, beta combines a measure of volatility with...

Actual investor returns from mutual funds lag behind hypothetical returns based on a fixed initial investment and reinvestment of all distributions. This gap arises from behaviorally driven errors in timing. The nonproprietary literature on this performance gap has emphasized the relationship of...

Truth routinely manifests itself through mathematics. Just as law uses words to animate its enterprise, nature speaks through the language of mathematics. Through this volume, Illustrating Finance Policy with Mathematica, Nicholas L. Georgakopoulos enriches the Palgrave Macmillan, series,...

This essay presents higher-moment asset pricing, a generalized approach to finance that combines a mathematically informed understanding of economic fundamentals with psychologically and biologically inspired behavioral insights. It ultimately seeks to apply higher-moment asset pricing to a wide...

This article reviews two leading measures of financial risk and an emerging alternative. Embraced by the Basel accords, value-at-risk and expected shortfall are the leading measures of financial risk. Expectiles offset the weaknesses of value-at-risk (VaR) and expected shortfall. Indeed,...

The law of regulated industries, particularly the legislative command that the government ensure “just and reasonable rates” for regulated services, is a highly specialized application of financial economics. Ratemaking, to put it bluntly, represents a regulatory exercise in capital asset...

In her 2017 book, Rules for a Flat World, Gillian Hadfield upbraids the legal profession and the legal academy for ascribing supremacy, even exclusivity, to traditional legal institutions. Legal infrastructure, especially in the poorest countries, depends on entrepreneurs willing to shatter...

This essay seeks to rehabilitate the capital asset pricing model by splitting beta, the basic unit of systematic risk, into subatomic (or “baryonic”) components. By analogy to quantum chromodynamics and other aspects of the Standard Model of particle physics, this essay bifurcates beta on...

A stretched exponential function taking the form, f(x) = exp(-x^β), x ∈ [0, ∞), β ∈ (0, 1], characterizes decay, diffusion, and relaxation phenomena known as Kohlrausch-Williams-Watts (KWW) processes. Recent work, particularly on relaxation kinetics in metallic glasses, has described the...