Complex Systems, 'Spatio-Temporal Anti-Compliance Coordination' and Heuristics in Networks : A Critique of the Hipster Effect, Bankruptcy Prediction and Alternative Risk Premia

This article addresses decision-making parameters in machine-learning algorithms, and more specifically, critiques the mathematical explanation for the Hipster Effect (a group of evolutionary processes), and discusses implications for portfolio management and corporate bankruptcy prediction (two areas where AI has been used extensively) and corporate policies. The article also discusses the existence of “Spatio-Temporal Non-compliance Cartels” among companies within the technology sector in China (2005-2017), the S&P-500 companies (2000-2016; USA), and in the financial services industry in Nigeria (2006-2016) and in some Russian industries (1997-1999) – which resemble informal and undocumented collusive Strategic Alliances, and which contravene the Hipster Effect