Unraveling Hidden Order in the Dynamics of Developed and Emerging Markets

The characterization of asset price returns is an important subject in modern finance. Traditionally, the dynamics of stock returns are assumed to lack any temporal order. Here we present an analysis of the autocovariance of stock market indices and unravel temporal order in several major stock markets. We also demonstrate a fundamental difference between developed and emerging markets in the past decade - emerging markets are marked by positive order in contrast to developed markets whose dynamics are marked by weakly negative order. In addition, the reaction to financial crises was found to be reversed among developed and emerging markets, presenting large positive/negative autocovariance spikes following the onset of these crises. Notably, the Chinese market shows neutral or no order while being regarded as an emerging market. These findings show that despite the coupling between international markets and global trading, major differences exist between different markets, and demonstrate that the autocovariance of markets is correlated with their stability, as well as with their state of development.     

Modeling the Origin and Possible Control of the Wealth Inequality Surge

The rapid increase of wealth inequality in the past few decades is a most disturbing social and economic issue of our time. In order to control, and even reverse that surge, its origin and underlying mechanisms should be revealed. One of the challenges in studying these mechanisms is to incorporate realistic individual dynamics in the population level in a self-consistent manner. Our theoretical approach meets the challenge by using interacting multi-agent master-equations to model the dynamics of wealth inequality. The model is solved using stochastic multi-agent iterated maps. Taking into account growth rate, return on capital, private savings and economic mobility, we were able to capture the historical dynamics of wealth inequality in the United States during the course of the 20th century. We show that the fraction of capital income in the national income and the fraction of private savings are the critical factors that govern the wealth inequality dynamics. In addition, we found that economic mobility plays a crucial role in wealth accumulation. Notably, we found that the major decrease in private savings since the 1980s could be associated primarily with the recent surge in wealth inequality and if nothing changes in this respect we predict further increase in wealth inequality in the future. However, the 2007–08 financial crisis brought an opportunity to restrain the wealth inequality surge by increasing private savings. If this trend continues, it may lead to prevention, and even reversing, of the ongoing inequality surge.     

Bacterial linguistic communication and social intelligence

Bacteria have developed intricate communication capabilities (e.g. quorum-sensing, chemotactic signaling and plasmid exchange) to cooperatively self-organize into highly structured colonies with elevated environmental adaptability. We propose that bacteria use their intracellular flexibility, involving signal transduction networks and genomic plasticity, to collectively maintain linguistic communication: self and shared interpretations of chemical cues, exchange of chemical messages (semantic) and dialogues (pragmatic). Meaning-based communication permits colonial identity, intentional behavior (e.g. pheromone-based courtship for mating), purposeful alteration of colony structure (e.g. formation of fruiting bodies), decision-making (e.g. to sporulate) and the recognition and identification of other colonies - features we might begin to associate with a bacterial social intelligence. Such a social intelligence, should it exist, would require going beyond communication to encompass unknown additional intracellular processes to generate inheritable colonial memory and commonly shared genomic context.