Didier Sornette

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Didier Sornette
Didier Sornette.png
Born (1957-06-25) June 25, 1957 (age 59)
Paris, France
Residence Switzerland
Nationality France
Fields Physics, geophysics, complex systems, economics, finance
Institutions Swiss Federal Institute of Technology Zurich,
Swiss Finance Institute,
UCLA
Alma mater Ecole Normale Supérieure,
University of Nice
Known for Prediction of crises and extreme events in complex systems, physics of complex systems and pattern formation in spatio-temporal structures
Notable awards Science et Défence French National Award,
2000 Research McDonnell award,
Risques-Les Echos prize 2002 for Predictability of catastrophic events

Didier Sornette (born June 25, 1957 in Paris) is Professor on the Chair of Entrepreneurial Risks at the Swiss Federal Institute of Technology Zurich (ETH Zurich). He is also a professor of the Swiss Finance Institute, and a professor associated with both the department of Physics and the department of Earth Sciences at ETH Zurich. He was previously jointly a Professor of Geophysics at UCLA, Los Angeles California and a Research Director on the theory and prediction of complex systems at the French National Centre for Scientific Research.

Endo-exo dynamics[edit]

In 2004, Sornette used Amazon.com sales data to create a mathematical model for predicting bestseller potential based on very early sales results.[1][2][3] This was further developed to characterise the dynamics of success of YouTube videos.[4] This provides a general framework to analyse precursory and aftershock properties of shocks and ruptures in finance, material rupture, earthquakes, amazon.com sales: his work has documented ubiquitous power laws similar to the Omori law in seismology that allow one to distinguish between external shocks and endogenous self-organization.[5]

Bubbles and dragon-kings[edit]

He is known for his work on financial bubbles,[6][7][8] and has set up the Financial Crisis Observatory.[9] He has developed the Dragon King Theory of extreme events.[10][11]

Social bubble hypothesis[edit]

Together with Monika Gisler, he introduced the social bubble hypothesis[12] in a form that can be scrutinized methodically:[13][14][15][16] strong social interactions between enthusiastic supporters of an idea/concept/project weave a network based on positive feedbacks, leading to widespread endorsement and extraordinary commitment by those involved in the respective project beyond what would be rationalized by a standard cost-benefit analysis.[17] The social bubble hypothesis does not cast any value system, however, notwithstanding the use of the term "bubble," which is often associated with a negative outcome. Rather, it identifies the types of dynamics that shape scientific or technological endeavors. In other words, according to the social bubble hypothesis, major projects do in general proceed via a social bubble mechanism. In other words, it is claimed that most of the disruptive innovations go through such a social bubble dynamics.

The social bubble hypothesis is related to Schumpeter’s famous creative destruction and to the “technological economic paradigm shift” of the social economist Carlota Perez[18][19] who studies bubbles as antecedents of “techno-economic paradigm shifts.” Drawing from his professional experience as a venture capitalist, William H. Janeway similarly stresses the positive role of asset bubbles in financing technological innovations.[20]

Civil super-Manhattan project in nuclear research[edit]

He has recently proposed a civil super-Manhattan project in nuclear research for a safer and prosperous world,[21] based on two observations: (i) mankind progress is based on the access to plenty, cheap and concentrated energy and this is all the more important with the current population growth; (ii) Humankind is confronted with a “nuclear stewardship curse”, facing the prospect of needing to manage nuclear products over long time scales in the face of the short-time scales of human politics. To address these two issues, he has proposed an effort to rejuvenate the nuclear energy industry to overcome the current dead-end in which it finds itself. He is advocating a paradigm shift from a low probability of incidents/accidents to a zero-accident technology and a genuine detoxification of the wastes. He estimates the effort to be about 1% GDP investment over a decade in the main nuclear countries could boost economic growth.

The Swiss franc as a "precious metal" and the Swiss Sovereign Fund[edit]

In 2015, in reaction to the extraordinary pressure on the Swiss franc and the general debate that a strong Swiss franc is a problem for Switzerland, he has introduced the contrarian concept that a strong Swiss franc is an extraordinary opportunity for Switzerland. He argues that the strong Swiss franc is the emergence (in the sense of complex adaptive systems) of the aggregate qualities of Switzerland, its political systems, its infrastructure, its work organisation and ethics, its culture and much more. He proposes to "mine" Swiss francs to stabilise the exchange against the euro to an economically and politically consensus (that could be around 1.20-1.25 ChF per euro) and buy as much euros and dollars as is necessary for this. The proceeds will be reinvested in a Swiss Sovereign Fund, which could reach a size of one trillion euros or more, according to the strategies used by the Norvegian sovereign fund, the Singaporean sovereign funds and university endowment funds such as Harvard or Stanford. A full English version and a presentation can be found at [1]. A summary of the arguments has been presented in the German speaking media [22] [2].

Books[edit]

  • Scale invariance and beyond" (with B. Dubrulle and F. Graner, eds.), EDP Sciences and Springer, Berlin, 1997, 286 pages.
  • Why Stock Markets Crash (Critical Events in Complex Financial Systems) Princeton University Press, 2003. ISBN 0-691-09630-9
  • Critical Phenomena in Natural Sciences, Chaos, Fractals, Self-organization and Disorder: Concepts and Tools, Second edition, Springer Series in Synergetics, Heidelberg, 2004. ISBN 3-540-40754-5
  • Extreme Financial Risks (From dependence to risk management) (with Y. Malevergne). Springer, Heidelberg, 2005.
  • Theory of Zipf's law and beyond (with A. Saichev and Y. Malevergne), Lecture Notes in Economics and Mathematical Systems, Volume 632, Springer (November 2009), ISBN 978-3-642-02945-5
  • Man-made Catastrophes and Risk Information Concealment (25 case studies of major disasters and human fallibility) (with Dmitry Chernov). Springer, 1st ed. 2016 edition (October 28, 2015) (342 pages), DOI 10.1007/978-3-319-24301-6, Hardcover ISBN 978-3-319-24299-6, eBook ISBN 978-3-319-24301-6

References[edit]

  1. ^ Sornette, D.; Deschatres, F.; Gilbert, T.; Ageon, Y (2004). "Endogenous Versus Exogenous Shocks in Complex Networks: an Empirical Test Using Book Sale Ranking". Physical Review Letters. arXiv:cond-mat/0310135. 
  2. ^ "Researchers use physics to analyze dynamics of bestsellers". PhysOrg.com: December 5, 2004. Retrieved December 7, 2005.
  3. ^ "UCLA Physicist Applies Physics to Best-Selling Books". UCLA News: December 1, 2004. Retrieved December 7, 2005.
  4. ^ R. Crane and D. Sornette, Robust dynamic classes revealed by measuring the response function of a social system, Proc. Natl. Acad. Sci. USA 105 (41), 15649-15653 (2008)
  5. ^ http://www.er.ethz.ch/media/essays/origins.html
  6. ^ http://www.er.ethz.ch/media/publications/social-systems-finance/bubbles_and_crashes_theory.html
  7. ^ http://www.er.ethz.ch/media/publications/social-systems-finance/bubbles_and_crashes_theory_empirical_analyses.html
  8. ^ "Didier Sornette: How we can predict the next financial crisis". TED. June 2013. Retrieved 19 June 2013. 
  9. ^ http://www.er.ethz.ch/financial-crisis-observatory.html
  10. ^ D. Sornette, Dragon-Kings, Black Swans and the Prediction of Crises, International Journal of Terraspace Science and Engineering 2009
  11. ^ Sornette, D., Ouillon, G., Dragon-kings: Mechanisms, statistical methods and empirical evidence, The European Physical Journal Special Topics, 2012
  12. ^ http://www.er.ethz.ch/media/publications/social-systems-finance/social_bubbles.html
  13. ^ Monika Gisler and Didier Sornette, Exuberant Innovations: The Apollo Program, Society 46, 55-68 (2009), DOI: 10.1007/s12115-008-9163-8
  14. ^ Monika Gisler; Didier Sornette; Ryan Woodard (2011). "Innovation as a Social Bubble: The Example of the Human Genome Project". Research Policy 40: 1412–1425. doi:10.1016/j.respol.2011.05.019. 
  15. ^ Monika Gisler and Didier Sornette, Bubbles Everywhere in Human Affairs, chapter in book entitled "Modern RISC-Societies. Towards a New Framework for Societal Evolution", L. Kajfez Bogataj, K.H. Mueller, I. Svetlik, N. Tos (eds.), Wien, edition echoraum: 137-153 (2010)
  16. ^ http://ssrn.com/abstract=1590816
  17. ^ D. Sornette, Nurturing Breakthroughs; Lessons from Complexity Theory, Journal of Economic Interaction and Coordination 3, 165-181 (2008)
  18. ^ Perez, C. 2002. Technological Revolutions and Financial Capital. The Dynamics of Bubbles and Golden Ages. Edward Elgar, Cheltenham/Northampton
  19. ^ Perez, C. 2009. The double bubble at the turn of the century: technological roots and structural implications. Cambridge Journal of Economics 33: 779–805, doi:10.1093/cje/bep028
  20. ^ Janeway, W.H. 2012: Doing Capitalism in the Innovation Economy, Cambridge: Cambridge University Press
  21. ^ D. Sornette (2015). "A civil super-Manhattan project in nuclear R&D for a safer and prosperous world". Energy Research & Social Science 8: 60–65. arXiv:1504.06985. 
  22. ^ D. Sornette, Ein Schweizer Souveränitätsfonds, Politik & Wirtschaft, Schweizer Monat 1030, 26-31 (Oktober 2015)

External links[edit]