Myron Scholes spoke on campus yesterday. While he gave an interesting talk on risk and liquidity and the need for markets for risk transfer, it was a fairly narrow talk. I guess I expected a little bit broader topic for a broad audience. He did confess a number of times that he's "an options guy."
The one point I thought was intriguing was an idea around teams and chaos.
"With more uncertainty the value of human capital increases. Teams are more valuable in chaotic environments."
I guess it makes sense as the team (i.e. human capital) is inherently more flexible than fixed assets, plant, equipment, or even financial capital (that's the throwing money at a problem doesn't always fix it principle). It seems then that in a chaotic environment value is attributed to the most flexible resource.
And tying this back to Myron Scholes and his contribution to the Black-Scholes option model, it makes sense: increased volatility means higher option values => increased chaos means higher value for flexibility.
Posted by Jeremy Showalter at March 1, 2006 11:43 PMThat's cool that Scholes came to campus.
Posted by: KV at March 2, 2006 05:36 AM