Oxford Martin School

17 January 2008 15:30 - 17:00

Professor Didier Sornette, Professor on the Chair of Entrepreneurial Risks, ETH Zurich (Swiss Federal Institute of Technology)

Are large biological extinctions such as the Cretaceous/Tertiary KT boundary due to a meteorite, extreme volcanic activity or self-organized critical extinction cascades? Are commercial successes due to a progressive reputation cascade or the result of a well orchestrated advertisement? Are financial crashes due to external shocks or to self-organized instabilities, are intermittent bursts of financial volatility resulting from external shocks or from cumulative effects of news in a long-memory system, and so on. Determining the chain of causality for extreme events in complex systems requires disentangling interwoven exogenous and endogenous contributions with either no clear or too many signatures.

Here, I review several efforts carried out with collaborators, which suggest a general strategy for understanding the organization of several complex systems under the dual effect of endogenous and exogenous fluctuations. The studied examples are: Internet download shocks, fame dynamics of videos on YouTube, cyber-risks, book sale dynamics, social crises, financial volatility shocks, and financial crashes as well as illnesses and the immune system dynamics. Simple models are offered to quantitatively relate the endogenous organization to the exogenous response of the systems. The models and their calibration to the data provide in insight into the possibility and limits of predictability.