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Mechanisms of semantic communication of information and dynamics of complex systems. Application to financial markets

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  • Ivanova, Inga
  • Rzadkowski, Grzegorz

Abstract

The analysis of complex systems from an information theoretical perspective requires a more complex framework than that entertained in Shannon's mathematical theory of communication. Extending this theory from engineering to semantic communications allows us to move from the static to dynamic aspects of information communication. While in engineering communications information is only measurable, in semantic communications information is the driving force for the emergent properties of a complex system that determine its dynamics. The paper discusses how information is communicated in a complex system such as a financial market, how market prices change in response to information processing by market participants, and how non-linear information dynamics affect the movement of market prices. We analyze historical data of the SP 500 market for the period 1950–2025 using the logistic Continuous Wavelet Transformation method. This approach allows us to identify various patterns in system dynamics. These patterns are conceptualized using a theory of reflexive communication of information in a system consisting of heterogeneous agents who assign meaning to information from different perspectives. This allows us to describe the dynamics of the market and make forecasts of its development using the most general mechanisms of information circulation within the content-free information approach.

Suggested Citation

  • Ivanova, Inga & Rzadkowski, Grzegorz, 2025. "Mechanisms of semantic communication of information and dynamics of complex systems. Application to financial markets," Chaos, Solitons & Fractals, Elsevier, vol. 200(P3).
    • Handle: RePEc:eee:chsofr:v:200:y:2025:i:p3:s0960077925011440
    DOI: 10.1016/j.chaos.2025.117131
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