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Complexity and endogenous instability

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  • Al-Suwailem, Sami

Abstract

The global financial crisis proved the critical impact of the gap between individual rationality and group rationality. This gap is not supposed to arise in a Neoclassical world, but it frequently arises in a world as complex as ours. The paper explores how endogenous instability might arise due to such a gap, and what behavioral rules might help to mitigate its impact.

Suggested Citation

  • Al-Suwailem, Sami, 2014. "Complexity and endogenous instability," Research in International Business and Finance, Elsevier, vol. 30(C), pages 393-410.
    • Handle: RePEc:eee:riibaf:v:30:y:2014:i:c:p:393-410
    DOI: 10.1016/j.ribaf.2012.08.002
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    5. Andrikopoulos, Andreas & Samitas, Aristeidis & Bekiaris, Michalis, 2014. "Corporate social responsibility reporting in financial institutions: Evidence from Euronext," Research in International Business and Finance, Elsevier, vol. 32(C), pages 27-35.

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    More about this item

    Keywords

    Fallacy of composition; Empathy; n-Person Prisoner's Dilemma games; n-Person zero-sum games; Symmetry; The Golden Rule;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D87 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Neuroeconomics
    • G01 - Financial Economics - - General - - - Financial Crises

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