Get Modeling Complexity in Economic and Social Systems PDF

By Frank Schweitzer

ISBN-10: 9812380345

ISBN-13: 9789812380340

ISBN-10: 9812777261

ISBN-13: 9789812777263

Economics and the social sciences are, in reality, the "hard" sciences, as Herbert Simon argued, as the complexity of the issues handled can't easily be diminished to analytically solvable types or decomposed into separate subprocesses. however, lately, the rising interdisciplinary "sciences of complexity" have supplied new equipment and instruments for tackling those difficulties, starting from complicated info research to stylish machine simulations. particularly, complex equipment built within the normal sciences have lately additionally been utilized to social and monetary difficulties. The 21 chapters of this article replicate this contemporary improvement from a variety of modelling views (such as agent-based versions, evolutionary video game thought, reinforcement studying and neural community recommendations, time sequence research, non-equilibrium macroscopic dynamics) and for a vast diversity of socio-economic functions (market dynamics, technological evolution, spatial dynamics and monetary progress, choice procedures and agent societies). They together exhibit a shift of point of view in economics and the social sciences that's permitting a brand new outlook during this box to emerge.

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Sample text

Stepanenko 2. Electrodynamics Analogy The general picture, sketched above, of the restoration of equilibrium in financial markets resembles screening in electrodynamics. Indeed, in the case of electrodynamics, negative charges move into the region of the positive electric field, positive charges get out of the region and thus screen the field. Comparing this with the financial market we can say that a local virtual arbitrage opportunity with a positive excess return plays a role of the positive electric field, speculators in the long position behave as negative charges, whilst the speculators in the short position behave as positive ones.

Unsuccessful traders quickly leave the market and do not affect the dynamics. At the same time, each of the traders has their own view on the market and their own anticipations. That is why their particular decision can be only modeled in a probabilistic way. In this sense the traders are not strictly rational but "quasi-rational" and the corresponding market where the guasi-rational investors deal, can be called a quasi-effective market. Let us turn to the results. First of all, the constructed model allows us to explain quantitatively the observed high-frequency return data.

The market mechanism slightly discussed above, can be transferred to every fxmarket, where a country's currency is expressed in another country's currency. For example, on the DEM/USD fx-market, US-dollars are priced in DEM. Having this basic market mechanism in mind, our considerations are subjected to the modeling of both a single agent and the complete fx-market. In particular, we will discuss the trading behavior of a single agent, his decision making process and his objective 38 G. Zimmermann, R.

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Modeling Complexity in Economic and Social Systems by Frank Schweitzer

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