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When anyone tries to predict what the financial markets will do just remind them that complex adaptive systems are tricky.
When anyone tries to predict what the financial markets will do just remind them that complex adaptive systems are tricky.
"It is clear that the financial system exhibits all of the classic characteristics of a [Complex Adaptive System], with the consequence that analysis of the likely reaction of individual agents to any event is not going to yield valid results for the system as a whole. Risk analysis for the financial system that uses statistical distribution analysis and constant correlations across agents will therefore fail to provide a reasonable indication of outcomes for the system as whole, particularly at the extremes where the reaction of a small number of agents can have a significant ripple effect across other agents."
Source: ssrn.com
agents system financial reaction adaptive analysis whole complex
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