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Modelling value bubbles in an attention based economy

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  • Cecilie Toftdahl Olesen

    (Niels Bohr Institute, Copenhagen University)

  • Kim Sneppen

    (Niels Bohr Institute, Copenhagen University)

Abstract

Exchange of products, ideas, and memes is ubiquitous across history and societies. Repeated transactions occasionally leads to “bubbles” where something becomes disproportionately valuable. Remarkably little has been done to explore this highly non-equilibrium aspect of economic activity. We suggest to view “bubble dynamics” in terms of a market of memory and attention. We introduce an agent based model where a positive feedback acting on recent memories is counteracted by a slower negative feedback. We discuss the model in the context of fashion cycles and financial bubbles. Graphical abstract

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  • Cecilie Toftdahl Olesen & Kim Sneppen, 2020. "Modelling value bubbles in an attention based economy," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 93(3), pages 1-5, March.
    • Handle: RePEc:spr:eurphb:v:93:y:2020:i:3:d:10.1140_epjb_e2020-100449-9
    DOI: 10.1140/epjb/e2020-100449-9
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    References listed on IDEAS

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    1. Stefan Bornholdt & Kim Sneppen, 2014. "Do Bitcoins make the world go round? On the dynamics of competing crypto-currencies," Papers 1403.6378, arXiv.org.
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    Cited by:

    1. Bornholdt, Stefan, 2022. "A q-spin Potts model of markets: Gain–loss asymmetry in stock indices as an emergent phenomenon," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 588(C).
    2. Stefan Bornholdt, 2021. "A q-spin Potts model of markets: Gain-loss asymmetry in stock indices as an emergent phenomenon," Papers 2112.06290, arXiv.org.

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