CCSS: Coping with Crises in Complex Socio-Economic Systems

This project is related to our research lines: Models of systemic risk and Financial networks

Duration: 44 months (September 2008 - April 2012)

Funding source: ETH Grant

Project partners: Six chairs from three different deparments of ETH Zürich: Prof. Kay Axhausen (D-BAUG), Prof. Lars-Erik Cederman (D-GESS), Prof. Dirk Helbing (D-GESS), Prof. Hans J. Herrmann (D-BAUG), Prof. Didier Sornette (D-MTEC), Prof. Frank Schweitzer (D-MTEC)

 

 

The project supports the activities of our ETH Competence Center "Coping with Crises in Complex Socio-Economic Systems" (CCSS), which started in September 2008. By means of theoretical and empirical analysis, CCSS aims at understanding the causes of and cures to crises in selected problem areas, for example in financial markets, in societal infrastructure, or crises involving political violence. While these different crises may have their own time scale and evolution, they can be seen as the unintentional result of the interaction among millions of social actors. In this project, we look at these crises as emergent phenomena in complex systems and we investigate the feedback mechanisms that generate them as well as the possible strategies to prevent or mitigate them.

The project consists of 3 working packages: (i) crises in financial markets, (ii) crises in societal infrastructure, (iii) crises involving political violence.

Our contribution is mainly in the work package: "Crises in financial markets''. Our scientific goal is to investigate possible mechanisms for the control of systemic risk and for the mitigation of crises. We develop a dynamic model of financial fragility that is based on the literature on liability networks in financial economics. We are able to analytically investigate the relation between individual risk diversification and emerging systemic risk, in the presence of financial acceleration. Understanding this relation is a first important step towards the possible control of systemic risk. On-going work focuses on extending the model to more complex situations and network structures.

 

Selected Activities

8 - 13 June, 2009, ETH Zurich, Zurich, Switzerland

20 - 24 June, 2011, ETH Zurich, Zurich, Switzerland

 

Selected Publications

The Structure of Financial Networks

[2010]
Battiston, Stefano; Glattfelder, James B.; Garlaschelli, Diego; Lillo, F; Caldarelli, Guido

Network Science pages: 131-163

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Power law signature of media exposure in human response waiting time distributions

[2010]
Crane, Riley; Schweitzer, Frank; Sornette, Didier

Physical Review E, pages: 1-6, volume: 81, number: 5

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Economic networks: The new challenges

[2009]
Schweitzer, Frank; Fagiolo, Giorgio; Sornette, Didier; Vega - Redondo, Fernando; Vespignani, Alessandro; White, Douglas R.

Science (New York, N.Y.), pages: 422-425, volume: 325, number: 5939

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Systemic risk in a unifying framework for cascading processes on networks

[2009]
Lorenz, Jan; Battiston, Stefano; Schweitzer, Frank

The European Physical Journal B, pages: 441-460, volume: 71, number: 4

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Systemic risk in a network fragility model analyzed with probability density evolution of persistent random walks

[2008]
Lorenz, Jan; Battiston, Stefano

Networks and Heterogeneous Media, pages: 185, volume: 3, number: 2

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Risk-seeking versus risk-avoiding investments in noisy periodic environments

[2008]
Navarro - Barrientos, Jesus Emeterio; Walter, Frank Edward; Schweitzer, Frank

International Journal of Modern Physics C, pages: 971-994, volume: 19, number: 6

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