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jean-philippe bouchaud

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76
Date
2022/11/22
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3
Job
Capital Fund Management | Chairman and Head of research
Content
Organized economic and social structures emerge from the interactions between different sub-parts. Indeed, these interactions allow for coordination and cooperation to take place, without which such emerging organizations would not even function. It turns out that in many cases, such systems spontaneously evolve towards an instability point – often because optimality and instability go hand in hand, as critical systems offer remarkable information processing capabilities. However, the proximity of an unstable point also means that minor perturbations can trigger large endogenous fluctuations or even global breakdowns, unrelated to large exogenous shocks that can of course also exist. Many situations where such a scenario appears to be operating have been identified – from economic activity, financial markets or transportation networks to flocks of starlings and, even more fascinating brain activity, which indeed offers remarkable processing capabilities!  https://lnkd.in/eHyxDD8N(Note that the illustration of the paper is actually a flock of starlings)  In all these systems, systemic breakdowns are known to occur, such as epileptic seizures, economic crises, financial crashes or system wide disruptions in national or international transportation.  While some of these events are exogenous and therefore unavoidable, others are endogenous and might to some extent be anticipated and mitigated, both in amplitude and frequency. In other words, if such disruptions are indeed of endogenous origin, one may try to find a balance between efficiency/optimality (which tend to push the system towards instability) and robustness/resilience. The latter is however usually costly as it entails various forms of redundancy: buffers, inventories, capital cushions, extra staff, etc. Of particular importance is the so-called “small shocks, large business cycle” paradox underlined by Ben Ber
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Integromat
Link
https://www.linkedin.com/feed/update/urn:li:activity:7000544505359654912
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4
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Post
Profile
https://www.linkedin.com/in/jean-philippe-bouchaud-bb08a15/
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