Related papers: Trust! Why it Has Been Lost and How to Regain It
This paper provides a general overview of different perspectives and studies on trust, offers a definition of trust, and provides factors that play a substantial role in developing social trust, and shows from which perspectives it can be…
Recovery of society after a large scale disaster generally consists of two phases, short- and long-term recoveries. The main goal of the short-term recovery is to bounce the damaged system back to the operating standards enabling residents…
The rapid adoption of artificial intelligence (AI) poses new and poorly understood threats to financial stability. We use a game-theoretic model to analyse the stability impact of AI, finding that it amplifies existing financial system…
Market confidence is essential for successful investing. By incorporating multi-market into the evolutionary minority game, we investigate the effects of investor beliefs on the evolution of collective behaviors and asset prices. When there…
Cheating is a real problem in the Internet of Things. The fundamental question that needs to be answered is how we can trust the validity of the data being generated in the first place. The problem, however, isn't inherent in whether or not…
This article is a prologue to the article "Why Markets are Inefficient: A Gambling 'Theory' of Financial Markets for Practitioners and Theorists." It presents important background for that article --- why gambling is important, even…
Corporate insolvency can have a devastating effect on the economy. With an increasing number of companies making expansion overseas to capitalize on foreign resources, a multinational corporate bankruptcy can disrupt the world's financial…
Todays modern society is extremely dependent on computer based information systems. Many of the organizations would simply not be able to function properly without services provided by these systems, just like financing organizations.…
Systemic liquidity risk, defined by the IMF as "the risk of simultaneous liquidity difficulties at multiple financial institutions", is a key topic in macroprudential policy and financial stress analysis. Specialized models to simulate…
This paper develops a two-step estimation methodology, which allows us to apply catastrophe theory to stock market returns with time-varying volatility and model stock market crashes. Utilizing high frequency data, we estimate the daily…
Every financial crisis has caused a dual shock to the global economy. The shortage of market liquidity, such as default in debt and bonds, has led to the spread of bankruptcies, such as Lehman Brothers in 2008. Using the data for the ETFs…
The global financial system is highly complex, with cross-border interconnections and interdependencies. In this highly interconnected environment, local financial shocks and events can be easily amplified and turned into global events.…
In the same way as the Hilbert Program was a response to the foundational crisis of mathematics, this article tries to formulate a research program for the socio-economic sciences. The aim of this contribution is to stimulate research in…
An interbank market lets participants pool the risk arising from the combination of illiquid investments and random withdrawals by depositors. But it also creates the potential for one bank's failure to trigger off avalanches of further…
The current research on credit risk is primarily focused on modeling default probabilities. Recovery rates are often treated as an afterthought; they are modeled independently, in many cases they are even assumed constant. This is despite…
'Animal spirits' or confidence levels are heavily dependent on how current conditions compare to adaptation levels. In the US, with its highly flexible labor markets and weak safety nets, the unemployment rate seems to serve as a…
Critical infrastructures form a technological skeleton of our world by providing us with water, food, electricity, gas, transportation, communication, banking, and finance. Moreover, as urban population increases, the role of…
In this paper, we perform a comparative segmentation and clustering analysis of the time series for the ten Dow Jones US economic sector indices between 14 February 2000 and 31 August 2008. From the temporal distributions of clustered…
We report a study of a stylized banking cascade model investigating systemic risk caused by counter party failure using liabilities and assets to define banks' balance sheet. In our stylized system, banks can be in two states: normally…
The Internet revolution in 1990, followed by the data-driven and information revolution, has transformed the world as we know it. Nowadays, what seam to be 10 to 20 years ago, a science fiction idea (i.e., machines dominating the world) is…