NDLI: Self-organized complexity in economics and finance

Content Provider	PubMed Central
Author	Stanley, H. E. Amaral, L. A. N. Buldyrev, S. V. Gopikrishnan, P. Plerou, V. Salinger, M. A.
Copyright Year	2002
Abstract	This article discusses some of the similarities between work being done by economists and by physicists seeking to contribute to economics. We also mention some of the differences in the approaches taken and seek to justify these different approaches by developing the argument that by approaching the same problem from different points of view, new results might emerge. In particular, we review two newly discovered scaling results that appear to be universal, in the sense that they hold for widely different economies as well as for different time periods: (i) the fluctuation of price changes of any stock market is characterized by a probability density function, which is a simple power law with exponent −4 extending over 102 SDs (a factor of 108 on the y axis); this result is analogous to the Gutenberg–Richter power law describing the histogram of earthquakes of a given strength; and (ii) for a wide range of economic organizations, the histogram shows how size of organization is inversely correlated to fluctuations in size with an exponent ≈0.2. Neither of these two new empirical laws has a firm theoretical foundation. We also discuss results that are reminiscent of phase transitions in spin systems, where the divergent behavior of the response function at the critical point (zero magnetic field) leads to large fluctuations.
Related Links	http://dx.doi.org/10.1073/pnas.022582899
Ending Page	2565
Page Count	5
Starting Page	2561
File Format	PDF
ISSN	00278424
e-ISSN	10916490
Journal	Proceedings of the National Academy of Sciences of the United States of America
Issue Number	Suppl 1
Volume Number	99
Language	English
Publisher	National Academy of Sciences
Publisher Date	2002-02-19
Access Restriction	Open
Rights Holder	National Academy of Sciences
Subject Keyword	General Research in Higher Education
Content Type	Text
Resource Type	Article
Subject	Multidisciplinary

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1	Ministry of Education (GoI), Department of Higher Education	Sanctioning Authority	https://www.education.gov.in/ict-initiatives
2	Indian Institute of Technology Kharagpur	Host Institute of the Project: The host institute of the project is responsible for providing infrastructure support and hosting the project	https://www.iitkgp.ac.in
3	National Digital Library of India Office, Indian Institute of Technology Kharagpur	The administrative and infrastructural headquarters of the project	Dr. B. Sutradhar bsutra@ndl.gov.in
4	Project PI / Joint PI	Principal Investigator and Joint Principal Investigators of the project	Dr. B. Sutradhar bsutra@ndl.gov.in Prof. Saswat Chakrabarti will be added soon
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