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The success of such would require extreme precision in modeling assumptions. For example, risk ratings on CDOs with mortgages assumed independence -- but that doesn't hold in reality. At least early[0], on this was recognized as a contributing factor to the misalignment in risk rating, and could have been completely automated.

[0] https://www.wired.com/2009/02/wp-quant/




It takes human cognition to understand the degree of independence. A machine could not have figured out the broader macroeconomic forces at play that led to mass defaults.


Precisely.




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