Markets coordinate the flow of information in the economy, aggregating it through the price mechanism. We develop a dynamic model of information transmission and aggregation in financial and other social networks in which continued membership in the network is contingent on the accuracy of...

Machine generated contents note: -- I: Introduction 1 1 Crises and Sunspots 3 2 Being Human 14 II: The Four Horsemen 23 3 Social Interactions and Computational Irreducibility 25 4 The Individual and the Human Wave: Emergent Phenomena 34 5 Context and Ergodicity 40 6 Human Experience and Radical...

This article describes the agent-based approach to modeling financial crises. It focuses on the interactions of agents and on how these interactions feed back to change the financial environment. It explains how these models embody the contagion and cascades that occur owing to the financial...