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Dragon Kings and the predictability of crises

In a TED talk “How we can predict the next financial crisis”, ETH socio-physicist Didier Sornette discusses the possibility of the prediction of extreme events in complex social or biophysical systems and presents examples where this is possible, and how.

His argument is based on the notion that extreme events – termed “dragon kings” – are preceded by specific warning signs that are the outcomes of processes like super-exponential growth that take place in dynamical and complex systems. Therefore, such extreme events that often manifest themselves as crashes and crises are essentially predictable.

 

It goes without saying that the presentation is far too short. It therefore should be regarded as an invitation to diving deeper into the work by Sornette and his colleagues.

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