Archives of “phenomena” tag

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Nails, Kingdoms and Chaos!

  
  Education
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The “Chaos Theory” contradicts reason, in fact it is somewhat of an oxymoron!

The “Chaos Theory” leads us to believe that a definitive knowledge about incomprehensible phenomena can lead us to unstable behavior that occurs when the state of the system uses no regular values!

Interesting questions can arise concerning why chaos has recently been noticed! Can the answer be given by the following folklore?

“For want of a nail, the shoe was lost.

For want of a shoe, the horse was lost.

For want of a horse, the rider was lost.

For want of a rider, a message was lost.

For want of a message, the battle was lost.

For want of a battle, the kingdom was lost!”

Small variations in initial conditions result in huge, dynamic transformations in concluding events. That is to say that there was no nail, and, therefore, the kingdom was lost!

Chaos!

Who wants the nail?

Which is the kingdom? 

Efficiency and Stability in Complex Financial Markets

  
  Education
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Efficiency and Stability in Complex Financial Markets

Abstract:

The authors study a simple model of an asset market with informed and non-informed agents. In the absence of non-informed agents, the market becomes information efficient when the number of traders with different private information is large enough. Upon introducing non-informed agents, the authors find that the latter contribute significantly to the trading activity if and only if the market is (nearly) information efficient. This suggests that information efficiency might be a necessary condition for bubble phenomena – induced by the behavior of non-informed traders – or conversely that throwing some sands in the gears of financial markets may curb the occurrence of bubbles.

via Efficiency and Stability in Complex Financial Markets by Fabio Caccioli, Matteo Marsili :: SSRN.

Risk, fear and worry

  
  Education
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They’re not the same.

Risk is all around us. When we encounter potential points of failure, we’re face to face with risk. And nothing courts risk more than art, the desire to do something for the first time–to make a difference.

Fear is a natural reaction to risk. While risk is real and external, fear exists only in our imagination. Fear is the workout we give ourselves imagining what will happen if things don’t work out.

And worry? Worry is the hard work of actively (and mentally) working against the fear. Worry is our effort to imagine every possible way to avoid the outcome that is causing us fear, and failing that, to survive the thing that we fear if it comes to fruition.

If you’ve persuaded yourself that risk is sufficient cause for fear, and that fear is sufficient cause for worry, you’re in for some long nights and soon you’ll abandon your art out of exhaustion. On the other hand, you can choose to see the three as completely separate phenomena, and realize that it’s possible to have risk (a good thing) without debilitating fear or its best friend, obsessive worry.

Separate first, eliminate false causation, then go ahead and do your best work.

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