Occupy the Financial Niche – Saturation and Crisis (discontinuous decisions)

• Main Author: Ionut PURICA
• Format: Article
• Language: English
• Published: Faculty of Economic Sciences, Hyperion University, Bucharest, Romania 2014-09-01
• Series: Hyperion Economic Journal
• Subjects: nonlinear models; decision; financial crisis; meme
• Online Access: http://hej.hyperion.ro/articles/3(2)_2014/HEJ%20nr3(2)_2014_A2Purica.pdf

The model presented is proposing an approach that could verify the nonlinear behaviour during a crisis, such that to quantify and predict potential discontinuous behaviour. In this case, the crisis behaviour associated with financial funds reallocation among various credit instruments, described as memes with the sense of Dawkins, is shown to be of discontinuous nature stemming from a logistic penetration in the financial behaviour niche. Actually the logistic penetration is typical in creating cyclic behaviour of economic structures as shown by Marchetti and others from IIASA. A Fokker-Planck equation description results in a stationary solution having a bifurcation like solution with evolution trajectories on a ‘cusp’ type catastrophe that may describe discontinuous decision behaviour