Related papers: Big is Fragile: An Attempt at Theorizing Scale
The purpose of this article is to propose a new "theory," the Strategic Analysis of Financial Markets (SAFM) theory, that explains the operation of financial markets using the analytical perspective of an enlightened gambler. The gambler…
What looks like acceleration can be a quiet transfer of burden from the present to the future. Attempts to replace human labor with AI systems are often presented as rational responses to technological progress, but that view is often…
The latest financial crisis has painfully revealed the dangers arising from a globally interconnected financial system. Conventional approaches based on the notion of the existence of equilibrium and those which rely on statistical…
Particularly over the last ten years, Agile has attracted not only the praises of a broad range of enthusiast software developers, but also the criticism of others. Either way, adoption or rejection of Agile seems sometimes to be based more…
The consensus that complexity begets stability in ecosystems was challenged in the seventies, a result recently extended to ecologically-inspired networks. The approaches assume the existence of a feasible equilibrium, i.e. with positive…
In the General Theory, Keynes remarked that the economy's state depends on expectations, and that these expectations can be subject to sudden swings. In this work, we develop a multiple equilibria behavioural business cycle model that can…
Managing a portfolio to a risk model can tilt the portfolio toward weaknesses of the model. As a result, the optimized portfolio acquires downside exposure to uncertainty in the model itself, what we call "second order risk." We propose a…
Modern financial networks exhibit a high degree of interconnectedness and determining the causes of instability and contagion in financial networks is necessary to inform policy and avoid future financial collapse. In the American Economic…
We consider networks in which random walkers are removed because of the failure of specific nodes. We interpret the rate of loss as a measure of the importance of nodes, a notion we denote as failure-centrality. We show that the degree of…
Fluctuation scaling is observed phenomenon from complex networks through finance to ecology. It means that the variance and the mean of a specific quantity are related as $\ev{\sigma^2|n}\propto \ev{n|A}^{2\alpha}$ with $1/2\geq \alpha \geq…
Complex organizations accomplish tasks through many steps of collaboration among workers. Corporate culture supports collaborations by establishing norms and reducing misunderstandings. Because a strong corporate culture relies on costly,…
Resilience is a rehashed concept in natural hazard management - resilience of cities to earthquakes, to floods, to fire, etc. In a word, a system is said to be resilient if there exists a strategy that can drive the system state back to…
The relationships between diversity, productivity and scale determine much of the structure and robustness of complex biological and social systems. While arguments for the link between specialization and productivity are common, diversity…
The instability of the financial system as experienced in recent years and in previous periods is often linked to credit defaults, i.e., to the failure of obligors to make promised payments. Given the large number of credit contracts, this…
We initiate a study of algorithms with a focus on the computational complexity of individual elements, and introduce the fragile complexity of comparison-based algorithms as the maximal number of comparisons any individual element takes…
Networks are known to be prone to link failures. In this paper we set out to investigate how networks of varying connectivity patterns respond to different link failure schemes in terms of connectivity, clustering coefficient and shortest…
An explanation for the political processes leading to the sudden collapse of empires and states would be useful for understanding both historical and contemporary political events. We seek a general description of state collapse spanning…
This paper characterizes the probability of a market failure defined as the default of two or more globally systemically important banks (G-SIBs) in a small interval of time. The default probabilities of the G-SIBs are correlated through…
The article first describes characteristics of major infrastructure projects. Second, it documents a much neglected topic in economics: that ex ante estimates of costs and benefits are often very different from actual ex post costs and…
External or internal shocks may lead to the collapse of a system consisting of many agents. If the shock hits only one agent initially and causes it to fail, this can induce a cascade of failures among neighoring agents. Several critical…