Influence of information flow in the formation of economic cycles

A microscopic approach to macroeconomic features is intended. A model for macroeconomic behavior based on the Ausloos-Clippe-Pekalski model is built and investigated. The influence of a discrete time information transfer is investigated. The formation of economic cycles is observed as a function of the time of information delay. Three regions of delay time are recognized: short $t_d \in (2 IS, 4 IS)$ (IS - iteration steps) - the system evolves toward a unique stable equilibrium state, medium $t_d =5 IS$ or $t_d =6 IS$, the system undergoes oscillations: stable concentration cycles appear in the system. For long information flow delay times, $t_d \geq 7$, the systems may crash for most initial concentrations. However, even in the case of long delay time the crash time may be long enough to allow observation of the system evolution and to introduce an appropriate strategy in order to avoid the collapse of the e.g. company concentration. In the long time delay it is also possible to observe an "economy resonance" where despite a long delay time the system evolves for a long time or can even reach a stable state, which insures its existence.Comment: 18 pages,16 figures, to be published in Verhulst 200 Proceedings, M. Ausloos and M. Dirickx, Eds. (in press

Crises and collective socio-economic phenomena: simple models and challenges

Financial and economic history is strewn with bubbles and crashes, booms and busts, crises and upheavals of all sorts. Understanding the origin of these events is arguably one of the most important problems in economic theory. In this paper, we review recent efforts to include heterogeneities and interactions in models of decision. We argue that the Random Field Ising model (RFIM) indeed provides a unifying framework to account for many collective socio-economic phenomena that lead to sudden ruptures and crises. We discuss different models that can capture potentially destabilising self-referential feedback loops, induced either by herding, i.e. reference to peers, or trending, i.e. reference to the past, and account for some of the phenomenology missing in the standard models. We discuss some empirically testable predictions of these models, for example robust signatures of RFIM-like herding effects, or the logarithmic decay of spatial correlations of voting patterns. One of the most striking result, inspired by statistical physics methods, is that Adam Smith's invisible hand can badly fail at solving simple coordination problems. We also insist on the issue of time-scales, that can be extremely long in some cases, and prevent socially optimal equilibria to be reached. As a theoretical challenge, the study of so-called "detailed-balance" violating decision rules is needed to decide whether conclusions based on current models (that all assume detailed-balance) are indeed robust and generic.Comment: Review paper accepted for a special issue of J Stat Phys; several minor improvements along reviewers' comment

A percolation-based model explaining delayed takeoff in new-product diffusion

A model of new-product diffusion is proposed in which a site-percolation dynamics represents socially driven diffusion of knowledge about the product's characteristics in a population of consumers. A consumer buys the new product if her valuation of it—formed after her witnessing the product in use among her friends or neighbors—is not below the price of the product announced in a given period. Our model attributes the empirical finding of a delayed takeoff of a new product to a drift of the percolation dynamics from a nonpercolating regime to a percolating regime. This drift is caused by learning effects lowering the price of the product, or by network effects increasing its individual valuations by consumers, both with an increasing number of buyers. Copyright 2008 , Oxford University Press.

Identification of a core-periphery structure among participants of a business climate survey

Processes of social opinion formation might be dominated by a set of closely connected agents who constitute the cohesive ‘core’ of a network and have a higher influence on the overall outcome of the process than those agents in the more sparsely connected ‘periphery’. Here we explore whether such a perspective could shed light on the dynamics of a well known economic sentiment index. To this end, we hypothesize that the respondents of the survey under investigation form a core-periphery network, and we identify those agents that define the core (in a discrete setting) or the proximity of each agent to the core (in a continuous setting). As it turns out, there is significant correlation between the so identified cores of different survey questions. Both the discrete and the continuous cores allow an almost perfect replication of the original series with a reduced data set of core members or weighted entries according to core proximity. Using a monthly time series on industrial production in Germany, we also compared experts’ predictions with the real economic development. The core members identified in the discrete setting showed significantly better prediction capabilities than those agents assigned to the periphery of the network

SiGe relaxation on silicon-on-insulator substrates: an experimental and modeling study

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On distributional properties of household consumption expenditures: the case of Italy

We present a model in which individuals' preferences are defined over their consumption, transfers to offspring, and social status associated with income. We show that a separating equilibrium exists where individuals' expenditure on conspicuous consumption is a signal for their unobserved income. In this equilibrium, poor families that climb up the social ladder by the accumulation of wealth engage in conspicuous consumption that prevents them from escaping poverty. Our model may explain why the poor make some choices that do not appear to help them escape poverty