Predicting Discontinuity in the Decision to Allocate Funds to Credit Memes with a Fokker-Planck Equation Based Model

Ionut Purica

Journal for Economic Forecasting, 2010, issue 2, 295-307

Abstract: The model is one theoretical approach within a broader research program that could verify the nonlinear conjectures made to quantify and predict potential discontinuous behaviour. In this case, the crisis behaviour associated with financial funds reallocation among various credit instruments, described as memes with the sense of Dawkins, is shown to be of discontinuous nature stemming from a logistic penetration into the behaviour niche. A Fokker-Planck equation description results in a stationary solution having a bifurcation like the solution with evolution trajectories on a ‘cusp’ type catastrophe that may describe discontinuous decision behaviour.

Keywords: nonlinear models; decision; financial crisis (search for similar items in EconPapers)
JEL-codes: C3 C61 C62 D7 D87 (search for similar items in EconPapers)
Date: 2010
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Working Paper: Predicting Discontinuity in the Decision to Allocate Funds to Credit Memes with a Fokker-Planck Equation Based Model (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:rjr:romjef:v::y:2010:i:2:p:295-307

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