Instability and Information
arXiv:1511.03732
Abstract
Many complex systems exhibit extreme events far more often than expected for a normal distribution. This work examines how self-similar bursts of activity across several orders of magnitude can emerge from first principles in systems that adapt to information. Surprising connections are found between two apparently unrelated research topics: hand-eye coordination in balancing tasks and speculative trading in financial markets. Seemingly paradoxically, locally minimising fluctuations can increase a dynamical system's sensitivity to unpredictable perturbations and thereby facilitate global catastrophes. This general principle is studied in several domain-specific models and in behavioural experiments. It explains many findings in both fields and resolves an apparent antinomy: the coexistence of stabilising control or market efficiency and perpetual instabilities resembling critical phenomena in physical systems.
Doctoral Dissertation. Department of Neurophysics, Institute for Theoretical Physics, University of Bremen. First referee and supervisor: Prof. Dr. Klaus Pawelzik. Second referee: Prof. Dr. Stefan Bornholdt. Defence: June 4, 2014. Defence referees: Prof. Dr. Klaus Pawelzik, Prof. Dr. Stefan Bornholdt, Prof. Dr. Monika Fritz, Prof. Dr. Dr. Ulrich Krause