Category talk:Behavioral and social facets of systemic risk

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Introduction[edit]

This category is tentative and preliminary. The pages attached to it are subject to change.

It was originally titled Systemic Risk - Behavioral & Social Facets but was updated per below.

Closed Discussion[edit]

Category:Systemic Risk - Behavioral & Social Facets

Open Discussion[edit]

Political Aspects ?[edit]

I'm torn here.

I created: Behavioral and social facets of systemic risk as a specialized aspect (more narrow focus) of the more general category: Systemic risk. Initially wanted to focus on psychology predominately vs. the "rational man" assumptions built into most economic models. Andrew Lo's paper cited above gives a good behavioral overview.

After much study felt that "man as an island" (the psychology / behavioral economics area including cognitive bias, decision making under stress, emotions, etc. ) was really only half the territory that must be covered. The phenomenon of Contagion struck me as half psychology (man as an island) with the other half being the behavior of groups of humans, above and apart from those individual islands (i.e. social psychology, sociology, etc.)

psychology -> social psychology -> multi-agent models -> market crash (Systemic Risk)

Nothing could be more directly related to the study of Systemic Risk than the Flash Crash. In the aftermath of that event, Multi-Agent Models gained quite a bit of stature in the post crash analysis.

Multi-agent systems can manifest self-organization as well as self-steering and other control paradigms and related complex behaviors even when the individual strategies of all their agents are simple. (Quote from the Multi-Agent article)

Note how Multi-Agent systems incorporate various other disciplines such as social psychology, cybernetics, neural net style weighted "voting", that allows then to approximate human behavior.

Here are three examples of the recent rise of Mulit-Agent models in the deep probe of financial crashes and aberrations (i.e. systemic risk)

Paddrik, Mark E., Hayes, Roy Lee, Todd, Andrew, Yang, Steve, Scherer, William and Beling, Peter, An Agent Based Model of the E-Mini S&P 500 and the Flash Crash (September 22, 2011). Available at SSRN: http://ssrn.com/abstract=1932152 or http://dx.doi.org/10.2139/ssrn.1932152

Johnson, Neil and Tivnan, Brian, Flash Crash Phenomena and a Taxonomy of Extreme Behaviors (August 2, 2011). Eur. Phys. J. Special Topics 205, 65-78 (2012), DOI: 10.1140/epjst/e2012-01562-x . Available at SSRN: http://ssrn.com/abstract=2055804

and

A Multi Agent Model for the Limit Order Book Dynamics (Bartolozzi, 2010) http://arxiv.org/pdf/1005.0182v2.pdf Our future work will involve adding more realistic features and feedbacks in the model. In particular, one interesting effect to take into consideration would be the herding phenomenon which, it has been argued, to be at the origin of dramatic liquidity crises which can ultimately lead to financial crashes (Sornette, 2004).

As long as you are looking at multi-agent systems, might also look at things like: bees algorithm crowd psychology herd behavior swarm intelligence social neuroscience - roughly the inter-agent communication channels, sensitivity, bandwidth, etc.

More recently I found yet one more aspect that somewhat fits in to this generalized area - "Political facets of systemic risk" i.e. the politics involved in attaining effective mitigation of systemic risk through effective regulation.

See Regulatory_capture

There can be little debate that the worlds largest financial institutions have captured the regulatory agencies that attempt to regulate them.

Take a look at Deep Capture also. For example the Deep Capture section contained in this article. (O.K. on first blush you may feel transposed to a character in "The Matrix" here...) The Situation: An Introduction to the Situational Character, Critical Realism, Power Economics, and Deep Capture http://papers.ssrn.com/sol3/papers.cfm?abstract_id=938005

Bottom line

Regulatory Capture and Deep Capture are highly relevant to actually mitigating Systemic Risk via effective regulation. Looking for ways to break those subjects down to get the taxonomy correct. On one hand it looks like its in the realm of social psychology, hence belongs in Behavioral and social facets of systemic risk.

However this entire area would benefit from multiple experts having a very good, close look...

Rick (talk) 14:24, 3 August 2012 (UTC)

Just wanted to cite yet additional reference at a very high level - the Office of Financial Research housed in the U.S. Treasury Department. Using Agent-Based Models for Analyzing Threats to Financial Stability (12/21/2012) http://www.treasury.gov/initiatives/ofr/research/Documents/OFR_Working_Paper_No3_ABM_Bookstaber_Final.pdf Rick (talk) 05:31, 10 January 2013 (UTC)
Additional reference Clouds Seen in Regulators’ Crystal Ball for Banks [NYT] http://www.nytimes.com/2013/01/11/business/economy/models-for-financial-risk-are-still-seen-as-flawed.html?adxnnl=1&smid=tw-share&adxnnlx=1357927536-Bjr8nzYEvoBNpdeTreoYiQ “Agent-based modeling” has been used in a variety of nonfinancial areas, including traffic congestion and crowd dynamics (it turns out that putting a post in front of an emergency exit can actually improve the flow of people fleeing an emergency and thus save lives). ... Richard Berner, the director of the Office of Financial Research, said in an interview that his agency was trying to gather information in many areas, understanding that “all three of those things — the origination, the transmission and the amplification of a threat — are important.” The agency is supposed to provide information that regulators can use. .... benefits from such research are at least a few years away, however, and for now bank regulators are placing renewed emphasis on stress tests, which under the Dodd-Frank law must be conducted annually on the largest banks in the country. Rick (talk) 18:54, 11 January 2013 (UTC)

discussion[edit]

Hi. I'm an editor at Wikipedia. I don't know what "behavioral and social facets of systemic risk" are, and so I can't really assess whether it's appropriate for articles to be categorized into this category. Could the editor who created this category, or some other knowledgeable editor, please do a short article -- even a stub -- on Behavioral and social facets of systemic risk. Thanks, Lquilter (talk) 14:51, 18 October 2012 (UTC)

Human-computer topics?[edit]

Why are Usability, User interface design and HCI included here? These have associated risks, but they are not characteristic of these areas. I'll replace them with the more specific user error and mode error. Ditto for algorithms like Bees algorithm and technologies like Attentive user interface, where the connection with systemic risk is unclear. Diego Moya (talk) 11:00, 15 August 2013 (UTC)

I've added category User interface techniques‎ so that relevant methods to reduce risk can be found. Adding categories seems less risky than adding articles not directly related. Diego Moya (talk) 11:19, 15 August 2013 (UTC)