Explaining Financial Markets in Terms of Complex Systems.

Large changes of financial market prices without exogenous causes deviate significantly from the Gaussian behavior of random variables. This indicates that financial markets should be treated as complex systems, for which nonlinear interactions of its subunits/agents are crucial. I focus on how the...

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Publicado en:Philosophy of Science Vol. 81; no. 5; pp. 1117 - 1131
Autor principal: Kuhlmann, Meinard
Formato: Artículo
Publicado: Cambridge University Press Dec2014
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Acceso en línea:Ver este registro en EBSCOhost
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        Prices of securities
        Financial markets
        Complexity (Philosophy)
        Gaussian processes
        Random variables
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          Prices of securities
          Financial markets
          Complexity (Philosophy)
          Gaussian processes
          Random variables
      ab: Large changes of financial market prices without exogenous causes deviate significantly from the Gaussian behavior of random variables. This indicates that financial markets should be treated as complex systems, for which nonlinear interactions of its subunits/agents are crucial. I focus on how the complex systems perspective impacts the notion of explanations in economics. The mechanistic model seems to fit the bill, but problems surface on closer scrutiny. One characteristic of complex systems is that their behavior is surprisingly independent from microscopic details. Thus, mechanistic explanations in the microreductionist manner seem unavailable. Despite these conflicts, I defend a modified structural mechanistic approach.
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