There were over 23,000 heterogeneous securities with no reliable price information

Evidence

There were an enormous number of distinct heterogeneous securities (more than 23,000 types), but apparently there was no reliable price information from either markets (which had ground to a halt) or standard simulation methods (which had proved unreliable). Therefore, there was no reason for any market participant to generalize from information released by getting the price “right” for one security to the thousands of others available. The market designers placed in charge of implementing the auction acknowledged, “the relevant issues could not be addressed directly with economic theory.” So much for the bracing clarification of microeconomics. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 858

Categorization

• XREF: Theoretical mechanism design’s failure to deliver practical guidance in the real crisis echoes the broader ‘thought collective’ gap between economists’ abstract models and policy reality.