Evolving Resilience to Leverage Based Crashes
The model attempts to simulate agents' behaviour in more detail than previous work and allows us to see how excess leverage (borrowing funds for speculative investments) is a source of increased vulnerability and can act as a stimulus for crashes. The model illustrates how crashes come about as a consequence of synchronisation effects of the various agents in financial markets. The project concludes with recommendations for deeper exploration of risk management strategies using agent based modelling.
Algorithms and computational methods: Agents
Transdisciplinary tags: Complex Systems