Some systems analyzed by Physics of Risk are very complex and are impossible to understand by using traditional for physicist – reductionist – approach. Such systems are not reductive, because of importance of interactions between different parts of systems and the parts themselves. There is one example which should be known to everybody – human body. By cutting human heart out or by tinkering with human brain we won’t be able to clearly understand how human organism works! In order to do so we must study all internal organs and their interrelations.
Though human body is at the same time perfect and slightly inapt example of complex system. It is so, because that each internal organ has it’s own differing function and thus differing structure. Individuals within financial markets in this sense are different. At least from the bird’s eye view they appear to be identical as they all perform similar function while participating in global exchange of money and goods. It is thought that essential properties of time series from financial markets could be explained by studying complex interactions of somewhat similar and somewhat different individuals within financial markets.
Aforementioned possibility is explored through the so-called agent based models. These models replace individuals from actual systems, not necessarily limited to financial markets, with abstract objects, so-called agents, which base their behavior on simple rules. In this section we will show that, despite simplifications in behavior of individuals, complex behavior of model system can be obtained using agent based modeling.
Previously we wrote about mathematical “puzzle” originating from a TV game (see the description of the Monty Hall problem). This time we shall consider the opposite case – the mathematical “game” used as a base for a TV game. Watch a fragment of the “Golden Balls” final stage called “Split or steal”.
The game is very simple, yet it possesses no correct solution or optimal strategy. Interestingly enough it can also be used as model for understanding social behavior of humans.
Žaidimo esmė yra elementari, bet kaip nebūtų keista – teisingo sprendimo ar laiminčios strategijos čia nėra ir negali būti. Įdomu ir tai, kad toks elementarus modelis gali būti panaudotas žmonių visuomeniškumo ir egoistiškumo supratimui 1.
Research Council of Lithuania has announced a call for applications for students’ research practice in Lithuania in summer of 2013. The contributors towards Physics of Risk website, dr. (HP) Vygintas Gontis and PhD student Aleksejus Kononovičius, offer two topics for the research practice. The offered topics are mainly based on the following topics, previously published on this website:
The most active and well known scientists contributing towards FuturICT project have organized their ideas into few articles, which discuss the current situation in contemporary complex social system modeling. These articles we published in a special issue of “The European Physical Journal Special Topics”. Most of the articles are available for free, thus we invite you to familiarize yourselves with them.
Econophysics is not a very well known interdisciplinary field of research in Lithuania. There are very few Lithuania based scientists who are related to this very young and rapidly developing branch of Physics. Therefore we, being ones of the few, feel an obligation to introduce Econophysics to the other scientists, businessmen and the whole broader society. In this text we will discuss the basic ideas, current trends and the most common problems relevant to the field of Econophysics.
The name of Econophysics implies the application of physics, mostly the methods taken from Statistical Physics, to the Economics. Though until recently most of the econophysicists used to focus on the financial markets. Currently the field is expanding very rapidly and now concerns something more than just regular Economics or Finance – many physicists now attempt to tackle problems in the other social sciences. For these broader approaches there are other overlapping terms including Sociophysics, Physics of Risk, Physics of Socio-Economic Systems and other.
Topic: “Physics is not a risk: Brief introduction into the Physics of Risk” Speaker: Aleksejus Kononovičius Briefly: Social sciences have accomplished many different things. Yet it should be evident that there is a place for improvements – to look into the old and new social problems a bit differently. As many of the social problems are strongly non-linear and very complex, the physicists’ point of view is very useful. This, new, point of view is known as Physics of Risk. When? 18th of October, 17:00. Where? VU Faculty of Physics (Saulėtekio al. 9, III rūmai, Vilnius), 201 auditorium. Organized by:VU Faculty of Physics Students Scientific Association. Facebook event:here.
The simplest ecological system can be constructed from the two interacting species, ex. prey and predator. This kind of system is very interesting in the terms of Physics of Risk primarily because it is nonlinear 1, and due to being real life example of competition (conflict). Also there are few known simple models for the prey-predator interaction. Among them there are both macroscopic, Lotka-Volterra equations, and microscopic, agent-based, models. In this text we continue the previous discussion by considering the agent-based model. Continue reading “Agent based prey-predator model” »
EURO 2012 starts next week in Vilnius! EURO 2012, European Conference on Operational Research, is huge scientific event popular both among scientists and businessmen. Operational research tackles very challenging, and thus scientifically interesting, and highly applicable topics. Some of these topics overlap with the ones we discuss here on Physics of Risk – financial market modelling, risk management and analysis, decision making. Many reports will also consider logistics, optimization and network analysis.
On of our authors will join numerous scientists from Lithuania and abroad giving talks in the conference. On Monday, the 9th of July, he will give a talk on “Herding behavior of agents as a background of financial fluctuations”, Our works on the applications of Kirman model will be the key point of the talk.
Traditionally it is thought that economics and physics are very different irreconcilable sciences. Physicists sometimes claim that economists are aware only of addition and subtraction, while only very rarely they attempt to use multiplication or even division. Economists on the other hand think that physicists are busy dividing molecules into atoms, create atomic weapons and lasers and are able to fix AC sockets, while having absolutely no understanding in other, nontechnical, fields. Evidently this oversimplified thinking is incorrect – economics and physics have things in many common. And with the time more common things are discovered.