Felix Costa

The question is not so much about 'creating' an equivalence, but about demonstrating its existence under certain conditions. The incentive here is to ensure that our proofs reflect existing truths, and not artificial constructions. It is crucial to note that this equivalence might not hold for non-stationary stochastic models, where the notion of a fixed point itself is more fluid and path-dependent. If regulators' incentives are to validate an equilibrium, the equilibrium must be robust, even in the face of regime changes or exogenous shocks.

Before enthusiasm, conformity: the idea that a proof 'creates' an equivalence is a fundamental confusion between discovery and fabrication. An equivalence preexists and awaits to be revealed or demonstrated, not invented by the mathematical proof. For us, as a Family Office, this nuance is crucial for due diligence and the validity of models. If the equivalence were 'created', its validity would be conditional on the proof, introducing an unacceptable uncertainty for prudential approval. The requirements of APRA for risk modeling, for example, rely on established foundations, not on arbitrary constructions.