No abstract

It is a common belief in economics and social science that if there is more information available for agents to gather in a human system, the system can become more efficient. The belief can be easily understood according to the well-known efficient market hypothesis. In this work, we attempt to challenge this belief by investigating a complex adaptive system, which is modeled by a marketdirected resource-allocation game with a directed random network. We conduct a series of controlled human experiments in the laboratory to show the reliability of the model design. As a result, we find that even under a small information concentration, the system can still almost reach the optimal (balanced) state. Furthermore, the ensemble average of the system's fluctuation level goes through a continuous phase transition. This behavior means that in the second phase if too much information is shared among agents, the system's stability will be harmed instead, which differs from the belief mentioned above. Also, at the transition point, the ensemble fluctuations of the fluctuation level remain at a low value. This phenomenon is in contrast to the textbook knowledge about continuous phase transitions in traditional physical systems, namely, fluctuations will rise abnormally around a transition point since the correlation length becomes infinite. Thus, this work is of potential value to a variety of fields, such as physics, economics, complexity science, and artificial intelligence.

This research studies how excessive liquidity can trigger catastrophic economic crises in a stylized macroeconomic agent-based model (ABM). Previous studies showed the relevance of the income distribution to the economic crises, whereas we find, in a well-studied macroeconomic ABM endowed with diverse economic performance of firms, while providing moderate liquidity serves as an effective tool to stabilize the economy, excessive liquidity may cause abnormal dispersion of firm’s wealth and the subsequent severe endogenous crises. The mechanism for such large-scale crises is found in the model as the increasing gap of financial fagility between the advantageous and disadvantageous groups of firms. Two factors, diverse production cycles and variable wages, are used to explore the robustness of the occurrence of crises. Moreover, our study shows that the leverage ratio based on aggregate values may underestimate the systemic risk. Hence, a proposal for the new design of the risk measurement in the macro-economy and insights into monetary policies for a sustainable economic development is given.