Feature

Beware the Long Tail

Economic models of risk don’t add up, cadre of researchers caution

By Rachel Ehrenberg

- More than 2 years ago

When H. Eugene Stanley heard that Lehman Brothers had filed for bankruptcy, a small part of him was thrilled.

illustration: Janel Kiley, background: Maliketh/ISTOCKPHOTO

SPOTTING A TAIL Some models assume that financial data follow a typical bell curve (black), with data points clustered around an average and then tapering off quickly to either side.