Related papers: Why free markets die: An evolutionary perspective
Mergers and Acquisitions represent important forms of business deals, both because of the volumes involved in the transactions and because of the role of the innovation activity of companies. Nevertheless, Economic Complexity methods have…
Cooperation is a persistent behavioral pattern of entities pooling and sharing resources. Its ubiquity in nature poses a conundrum. Whenever two entities cooperate, one must willingly relinquish something of value to the other. Why is this…
In a market system, regulations are designed to prevent or rectify market failures that inhibit fair exchange, such as monopoly or transactions with hidden costs. Because regulations reduce profits to those possessing unfair advantage,…
Growth of business firms or companies has been a subject of intensive research over a century. However, there still remains controversy about the basic mechanisms of their growth. Inspired by previous work on scaling laws in other systems,…
The evolution of the Internet has manifested itself in many ways: the traffic characteristics, the interconnection topologies and the business relationships among the autonomous components. It is important to understand why (and how) this…
Natural selection favors the more successful individuals. This is the elementary premise that pervades common models of evolution. Under extreme conditions, however, the process may no longer be probabilistic. Those that meet certain…
The evolution of economic and innovation systems at the national scale is shaped by a complex dynamics, the footprint of which is the nested structure of the activities in which different countries are competitive. Nestedness is a…
Competitive interactions represent one of the driving forces behind evolution and natural selection in biological and sociological systems. For example, animals in an ecosystem may vie for food or mates; in a market economy, firms may…
We argue that an important contributing factor into market inefficiency is the lack of a robust mechanism for the stock price to rise if a company has good earnings, e.g., via buybacks/dividends. Instead, the stock price is prone to…
When several two-sided matching markets merge into one, it is inevitable that some agents will become worse off if the matching mechanism used is stable. I formalize this observation by defining the property of integration monotonicity,…
We study a spatially homogeneous model of a market where several agents or companies compete for a wealth resource. In analogy with ecological systems the simplest case of such models shows a kind of "competitive exclusion" principle.…
Financial asset markets are sociotechnical systems whose constituent agents are subject to evolutionary pressure as unprofitable agents exit the marketplace and more profitable agents continue to trade assets. Using a population of evolving…
Population expansions trigger many biomedical and ecological transitions, from tumor growth to invasions of non-native species. Although population spreading often selects for more invasive phenotypes, we show that this outcome is far from…
Competition for available resources is natural amongst coexisting species, and the fittest contenders dominate over the rest in evolution. The dynamics of this selection is studied using a simple linear model. It has similarities to…
Markets have internal dynamics leading to excess volatility and other phenomena that are difficult to explain using rational expectations models. This paper studies these using a nonequilibrium price formation rule, developed in the context…
Understanding cities is central to addressing major global challenges from climate and health to economic resilience. Although increasingly perceived as fundamental socio-economic units, the detailed fabric of urban economic activities is…
Technological advancement has lead to an increase in number and type of trading venues and diversification of goods traded. These changes have re-emphasized the importance of understanding the effects of market competition: does…
It has been widely observed that capitalization-weighted indexes can be beaten by surprisingly simple, systematic investment strategies. Indeed, in the U.S. stock market, equal-weighted portfolios, random-weighted portfolios, and other…
Competitive systems can exhibit both hierarchical (transitive) and cyclic (intransitive) structures. Despite theoretical interest in cyclic competition, which offers richer dynamics, and occupies a larger subset of the space of possible…
By incorporating market impact and asymmetric sensitivity into the evolutionary minority game, we study the coevolutionary dynamics of stock prices and investment strategies in financial markets. Both the stock price movement and the…