Anticipating economic market crises using measures of collective panic

Dion Harmon, Marco Lagi, Marcus A.M. De Aguiar, David D. Chinellato, Dan Braha, Irving R. Epstein, Yaneer Bar-Yam

Research output: Contribution to journalArticlepeer-review

28 Scopus citations

Abstract

Predicting panic is of critical importance in many areas of human and animal behavior, notably in the context of economics. The recent financial crisis is a case in point. Panic may be due to a specific external threat or self-generated nervousness. Here we show that the recent economic crisis and earlier large single-day panics were preceded by extended periods of high levels of market mimicry - direct evidence of uncertainty and nervousness, and of the comparatively weak influence of external news. High levels of mimicry can be a quite general indicator of the potential for self-organized crises.

Original languageEnglish
Article numbere0131871
JournalPLoS ONE
Volume10
Issue number7
DOIs
StatePublished - 17 Jul 2015
Externally publishedYes

ASJC Scopus subject areas

  • Biochemistry, Genetics and Molecular Biology (all)
  • Agricultural and Biological Sciences (all)
  • General

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