# Financial Markets Modeling **Domain:** Finance, Economics, Mathematics **Doc Type:** Concept Node **Classification:** Infrastructure Concept **Maturity:** Foundational **Related:** [[Financial Risk Modeling]], [[Economics]], [[Data Platforms]] --- ## Definition The **development and application of mathematical models to represent, predict, and optimize financial market behavior—asset pricing, risk assessment, trading strategies, and portfolio management**. Models translate market information and theory into decision rules. --- ## General Context Financial modeling builds on economic theory (efficient markets, rational expectations, equilibrium) to create mathematical tools for valuation and risk assessment. Models are used by traders, investors, and regulators to make decisions. --- ## Financial Systems Context Climate-adjusted financial models incorporate environmental risk data. See [[articles/climate-justice-meritocracy|How Reparative Justice Became Meritocracy]] on how climate data became proprietary financial risk signals. --- ## Planetary Sensing Context Financial models incorporate real-time environmental sensing data: satellite-based crop assessments, weather forecasting, emissions tracking. Access to sensing data provides financial advantage. --- ## Key Insight Models appear to be objective technical tools but embed assumptions about what variables matter, how risk should be measured, and what outcomes are desirable. Different models produce different valuations of the same assets. --- ## See Also [[Computational Process]], [[Control Theory]]