Trade and policy design with fools

A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools.

- Douglas Adams, The Hitchhiker's Guide to the Galaxy

Perhaps this is the problem with some of these complex hedges from banks or the best laid plans by policy-makers. The human element cannot always be measured. Correlations are not stale. Curves change. Liquidity changes. There are many factors which drive performance and design has to account for the fact that mistakes are made and the unexpected is the norm.