Paolo DOdorico | Searcharxiv

arXiv2021

The emergence of cooperation from shared goals in the Systemic Sustainability Game of common pool resources

The sustainable use of common-pool resources (CPRs) is a major environmental governance challenge because of their possible over-exploitation. Research in this field has overlooked the feedback between user decisions and resource dynamics. Here we develop an online game to perform a set of experiments in which users of the same CPR decide on their individual harvesting rates, which in turn depend on the resource dynamics. We show that, if users share common goals, a high level of self-organized cooperation emerges, leading to long-term resource sustainability. Otherwise, selfish/individualistic behaviors lead to resource depletion ("Tragedy of the Commons"). To explain these results, we develop an analytical model of coupled resource-decision dynamics based on optimal control theory and show how this framework reproduces the empirical results.

econ.TH↗

arXiv2019

Critical slowing down associated with critical transition and risk of collapse in cryptocurrency

The year 2017 saw the rise and fall of the crypto-currency market, followed by high variability in the price of all crypto-currencies. In this work, we study the abrupt transition in crypto-currency residuals, which is associated with the critical transition (the phenomenon of critical slowing down) or the stochastic transition phenomena. We find that, regardless of the specific crypto-currency or rolling window size, the autocorrelation always fluctuates around a high value, while the standard deviation increases monotonically. Therefore, while the autocorrelation does not display signals of critical slowing down, the standard deviation can be used to anticipate critical or stochastic transitions. In particular, we have detected two sudden jumps in the standard deviation, in the second quarter of 2017 and at the beginning of 2018, which could have served as early warning signals of two majors price collapses that have happened in the following periods. We finally propose a mean-field phenomenological model for the price of crypto-currency to show how the use of the standard deviation of the residuals is a better leading indicator of the collapse in price than the time series' autocorrelation. Our findings represent a first step towards a better diagnostic of the risk of critical transition in the price and/or volume of crypto-currencies.

q-fin.ST↗