arXiv subjects

Sandro Lera

Publications and source records attributed to Sandro Lera.

3 recordsLinked to original sources

arXiv2022

Non-Normal Interactions Create Socio-Economic Bubbles

In social networks, bursts of activity often result from the imitative behavior between interacting agents. The Ising model, along with its variants in the social sciences, serves as a foundational framework to explain these phenomena through its critical properties. We propose an alternative generic mechanism for the emergence of collective exuberance within a broad class of agent-based models. We show that our model does not require the fine-tuning to a critical point, as is commonly done to explain bursts of activity using the Ising model and its variants. Instead, our approach hinges on the intrinsic non-symmetric and hierarchical organization of socio-economic networks. These non-normal networks exhibit transient and unsustainable surges in herd behavior across a wide range of control parameters even in the subcritical regime, thereby eliminating the need for the - arguably artificial - fine-tuning proximity to a critical point. To empirically validate our framework, we examine the behavior of meme stocks and establish a direct linkage between the size of financial bubbles and the degree of non-normality in the network, as quantified by the Kreiss constant. Our proposed mechanism presents an alternative that is more general than prevailing conceptions of instabilities in diverse social systems.

nlin.AO↗

arXiv2020

Prediction and Prevention of Disproportionally Dominant Agents in Complex Networks

We develop an early warning system and subsequent optimal intervention policy to avoid the formation of disproportional dominance (`winner-takes-all') in growing complex networks. This is modeled as a system of interacting agents, whereby the rate at which an agent establishes connections to others is proportional to its already existing number of connections and its intrinsic fitness. We derive an exact 4-dimensional phase diagram that separates the growing system into two regimes: one where the `fit-get-richer' (FGR) and one where, eventually, the `winner-takes-all' (WTA). By calibrating the system's parameters with maximum likelihood, its distance from the WTA regime can be monitored in real time. This is demonstrated by applying the theory to the eToro social trading platform where users mimic each others trades. If the system state is within or close to the WTA regime, we show how to efficiently control the system back into a more stable state along a geodesic path in the space of fitness distributions. It turns out that the common measure of penalizing the most dominant agents does not solve sustainably the problem of drastic inequity. Instead, interventions that first create a critical mass of high-fitness individuals followed by pushing the relatively low-fitness individuals upward is the best way to avoid swelling inequity and escalating fragility.

physics.soc-ph↗

arXiv2015

Secular bipolar growth rate of the real US GDP per capita: implications for understanding past and future economic growth

We present a quantitative characterisation of the fluctuations of the annualized growth rate of the real US GDP per capita growth at many scales, using a wavelet transform analysis of two data sets, quarterly data from 1947 to 2015 and annual data from 1800 to 2010. Our main finding is that the distribution of GDP growth rates can be well approximated by a bimodal function associated to a series of switches between regimes of strong growth rate $ρ_\text{high}$ and regimes of low growth rate $ρ_\text{low}$. The succession of such two regimes compounds to produce a remarkably stable long term average real annualized growth rate of 1.6\% from 1800 to 2010 and $\approx 2.0\%$ since 1950, which is the result of a subtle compensation between the high and low growth regimes that alternate continuously. Thus, the overall growth dynamics of the US economy is punctuated, with phases of strong growth that are intrinsically unsustainable, followed by corrections or consolidation until the next boom starts. We interpret these findings within the theory of "social bubbles" and argue as a consequence that estimations of the cost of the 2008 crisis may be misleading. We also interpret the absence of strong recovery since 2008 as a protracted low growth regime $ρ_\text{low}$ associated with the exceptional nature of the preceding large growth regime.

q-fin.GN↗