Here's the scenario that makes it sensible to shelve the superior AI models: premise 1: financial crisis hits, requiring some firms to accept immediate loans (

Here's the scenario that makes it sensible to shelve the superior AI models: premise 1: financial crisis hits, requiring some firms to accept immediate loans (or off books loans aka qe) to maintain solvency (classic 2008 scenario) premise 2: firms will not have equivalent exposure, so some firms fail worse than others, but as the risk is viewed as "systemic" all get the bailout If some firms have AI that find risks hidden in investments that traditional (explainable) models ignore, then those firms will sit out of markets that will in the meantime be profitable for the firms that are unaware of the actual risk. Metaphorically, why ruin the 70s with an accurate HIV test. If the same models could be used to identify and securitize (and make a market in) the invisible risk, it's possible that the market price of the risk would similarly lead many firms to sit out of otherwise profitable markets, as the yields of many of the traditional investments would (after the cost of hedging) be poor. All this would result in a shrinking of the pie without an analytical explanation. "What do you mean the pie is smaller than we thought it was and we have to grow at a slower rate than we thought?", the CEO might ask. In most scenarios where quantitative approaches give better insight into the future, the firm to develop the approach makes a fortune until others can catch up. But what we have today is a financial system where keeping the overall system running hot is government policy, and so all participants have the incentive to ignore information that would lead to rational reallocation of investments. Once the system's normal is leveraged/hot enough, the system becomes resistant to certain kinds of true information.