Operating Mechanism Changes Detection in A Complex System

Financial Market is a Complex System.Quantitative analysis of Complex system is difficult. There is little mensurable method in this field. But we often need describe the running pattern in complex system. How can we describe and find the running pattern (structure) change in complex system. The conventional opinions of structural changes are mostly focused on the changes in some parameters of a chosen model, and the changes on model types. However, structural change is not only referred to the changes in a few parameters of a given model, but also the changes in the operating mechanism. This paper develops a neural network approach, which can detect the changes in the operating mechanism, as well as clustering the operation patterns in the complex system. The proposed methods have strong ability to recognize the operating mechanism of complex system, and carry out the process of structural change detection very well. What's more, the proposed methods not only can carry out the analysis of structural change detection, but also can make classifications on the operating patterns in the underlying system. In the end of this paper, a practical example is proposed to illustrate the effectiveness and feasibility of the proposed approaches.