For similar reasons, Andrew Lo, director of MIT's Laboratory for Financial Engineering, suggests separating regulation from forensics, as happens in the airline industry.

ECONOMIST: What regulators should do now

Midlevel employees tend to cash out most quickly, says Andrew Lo, a finance professor at the Massachusetts Institute of Technology's Sloan School of Management.

WSJ: Facebook's New Millionaires Present Motivational Challenge

In the 1980s and 1990s, renowned researchers Robert Arnott and Andrew Lo had separately investigated the extrapolation of company earnings by brokerage firm analysts.

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One economist leading the effort to define that new paradigm is Andrew Lo, of the Massachusetts Institute of Technology, who sees merit in both the rational and behavioural views.

ECONOMIST: Financial economics

Andrew Lo, of MIT's Sloan School of Management, was fond of pointing out that in the physical sciences three laws can explain 99% of behaviour, whereas in finance 99 laws can explain at best 3% of behaviour.

ECONOMIST: Schumpeter

At the workshop Andrew Lo of the Massachusetts Institute of Technology presented a model of the American housing market, inspired by ABM approaches, which showed how a fateful conjunction of rising house prices, falling interest rates and easy access to refinancing created an awesome burden of debt.

ECONOMIST: Economics focus