Seminar of the Department of Physics

[marzolino at ts.infn.it]

Dear professors, researchers and students

I would like to announce the seminar held by Prof. Matteo Marsili on
Thursday, 15 April, at 3pm in LUIGI STASI SEMINAR ROOM (Leonardo
Building).
Everyone who is interested is welcome.


TITLE:
Behavioral rule epidemics and financial crises


ABSTRACT:
Large scale changes in the structure of the economy or financial
markets, such as the current economic crisis, have their origin in the
behavioral rules which agents follow. In some cases, rules have a self-
reinforcing effect: the more agents adopt a rule, the more it becomes
reasonable for others to accept it. This promotes such rules to social
norms. Example include trusting counter-parties in financial
transactions, not performing independent risk analysis and over-
reliance on credit rating.
However, as rules develop and spread, becoming the norm, they may have
consequences at the aggregate level which are not anticipated by the
individuals. In particular, the conditions under which rules self-
reinforce may gradually erode, thus provoking sharp transitions
whereby most agents suddenly change their behavior. I will argue that
the liquidity crisis in credit derivative markets and in the interbank
market can indeed be traced back to these effects. This provides hints
on policy measures and on the regulation of financial markets.


Best regards,
Ugo Marzolino.


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