Financial Stress Through Complexity Science

Financial markets typically undergo periods of prosperity followed by periods of stagnation, and this undulation makes it challenging to maintain market efficiency. The efficient market hypothesis (EMH) states that there exist differences in structural complexity in security prices between regular and abnormal situations. Yet, despite a clear link between market acceleration (cf. recession in security prices) and stress in physical systems, indices of financial stress still have significant scope for further development. The overarching aim of this work is therefore to determine the characteristics of financial indices related to financial stress, and to establish a robust metric for the extent of such 'stress'. This is achieved based on intrinsic multiscale analysis which quantifies the so called complexity-loss hypothesis in the context of financial stress. The multiscale sample entropy and our proposed Assessment of Latent Index of Stress methods have successfully assessed financial stress, and have served as a measure to establish an analogy between transitions from 'normal' (relaxed) to 'abnormal' (stressed) financial periods with the sympatho-vagal balance in humans. Four major stock indices of the US economy over the past 25 years are considered: (i) Dow Jones Industrial Average, (ii) NASDAQ Composite, (iii) Standard & Poor's 500, and (iv) Russell 2000, together with FTSE 100, CAC 40 and exchange rates. Our findings support the EMH theory and reveal high stress for both the periods of Internet bubble burst and sub-prime mortgage crisis.This work was supported by the Financial Signal Processing Laboratory (http://www.fsplab.com/) at Imperial College London. The guest editor coordinating the review of this manuscript and approving it for publication was Prof. Ali N. Akansu.Hemakom, A.; Chanwimalueang, T.; Carrión García, A.; Aufegger, L.; Constantinides, AG.; Mandic, DP. (2016). Financial Stress Through Complexity Science. IEEE Journal of Selected Topics in Signal Processing. 10(6):1112-1126. doi:10.1109/JSTSP.2016.2581299S1112112610

Complexity, design and culture: convergences for digital experiences

The design of digital experiences and sociotechnical solutions in the contemporary society is characterized by increasing complexity. More and more variables are present and unpredictable effects are observed. The complexity of systems calls for increased awareness and problem-solving abilities. In this survey, design in general, and design of the user experience in particular, is positioned in the scope of complexity. Moreover, the design reasoning and methods are framed by culturally determined factors and cognitive styles. This survey aims to converge complexity and complex problem solving, design of the user experience, and cultural variations, reviewing bodies of work to inspire and map interdependencies that shape future challenges in systems and experience design.info:eu-repo/semantics/publishedVersio