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Trust is a collective, self-fulfilling phenomenon that suggests analogies with phase transitions. We introduce a stylized model for the build-up and collapse of trust in networks, which generically displays a first order transition. The…
Following the financial crisis of the late 2000s, policy makers have shown considerable interest in monitoring financial stability. Several central banks now publish indices of financial stress, which are essentially based upon market…
We introduce tools to capture the dynamics of three different pathways, in which the synchronization of human decision-making could lead to turbulent periods and contagion phenomena in financial markets. The first pathway is caused when…
Using frequency distributions of daily closing price time series of several financial market indexes, we investigate whether the bias away from an equiprobable sequence distribution found in the data, predicted by algorithmic information…
Understanding how societies react to epidemic threats requires more than tracking infection curves. Public perception, collective memory and behavioural adaptation interact through feedback loops that can amplify or suppress the spread of…
Throughout history, many countries have repeatedly experienced large swings in asset prices, which are usually accompanied by large fluctuations in macroeconomic activity. One of the characteristics of the period before major economic…
Human decision-making in real-life deviates significantly from the optimal decisions made by fully rational agents, primarily due to computational limitations or psychological biases. While existing studies in behavioral finance have…
Financial market forecasting is one of the most attractive practical applications of sentiment analysis. In this paper, we investigate the potential of using sentiment \emph{attitudes} (positive vs negative) and also sentiment…
We show that, provided one focuses on properly selected episodes, one can apply to the social sciences the same observational strategy that has proved successful in natural sciences such as astrophysics or geodynamics. For instance, in…
We study a rational expectation model of bubbles and crashes. The model has two components : (1) our key assumption is that a crash may be caused by local self-reinforcing imitation between noise traders. If the tendency for noise traders…
We present a new model for prediction markets, in which we use risk measures to model agents and introduce a market maker to describe the trading process. This specific choice on modelling tools brings us mathematical convenience. The…
Agent-based models provide a constructive approach to studying emergent dynamics in life-like systems composed of interacting, adaptive agents. Financial markets serve as a canonical example of such systems, where collective price dynamics…
Adaptively forecasting human behavior in social settings is an important step toward achieving Artificial General Intelligence. Most existing research in social forecasting has focused either on unfocused interactions, such as pedestrian…
Financial markets are a typical example of complex systems where interactions between constituents lead to many remarkable features. Here, we show that a pairwise maximum entropy model (or auto-logistic model) is able to describe switches…
Financial markets exhibit complex dynamics where localized events trigger ripple effects across entities. Previous event studies, constrained by static single-company analyses and simplistic assumptions, fail to capture these ripple…
Macroeconomic variables are known to significantly impact equity markets, but their predictive power for price fluctuations has been underexplored due to challenges such as infrequency and variability in timing of announcements, changing…
The realization that complex systems such as ecological communities can collapse or shift regimes suddenly and without rapid external forcing poses a serious challenge to our understanding and management of the natural world. The potential…
High-consequence decision making demands peak performance from individuals in positions of responsibility. Such executive authority bears the obligation to act despite uncertainty, limited resources, time constraints, and accountability…
We show that the emergence of systemic risk in complex systems can be understood from the evolution of functional networks representing interactions inferred from fluctuation correlations between macroscopic observables. Specifically, we…
Online social networks are increasingly being utilized for collective sense making and information processing in disasters. However, the underlying mechanisms that shape the dynamics of collective intelligence in online social networks…