Physics for Financial Markets

From Science Daily:

Top-down regulation of the system does not seem to be working. No institution has god-like insights and power: Frequently there is a lack of information and a delayed response. On top of increasing the level of bureaucracy, some of these policies may actually hamper the self-regulation of the markets. We now have a choice between continuing to operate on a detailed level, trying to control single factors by separate laws and bureaucratic structures, or concentrating on the design of the financial architecture and its interaction rules.

The authors strongly argue for the latter approach. Inspiration can be found in the theory of complex systems. This theory features a variety of methods and models which make it possible to understand and manage not only complex systems in physics and ecology, but social and economic systems as well.



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