Theory of human enterprise
Developing mathematical models of markets, innovation and organisations, so that we can predict them and enhance them through interventions.
Science has traditionally been concerned with the natural world. But as society gets more interconnected and organisations get bigger, the man-made world needs a science of its own.
The sentiment of borrowers and lenders in a financial network is what drives markets to success, but also to ruin. We develop mathematical methods to predict how distress spreads, and determine strategies to limit system-wide catastrophic failure. We determine the latent potential in countries and firms by applying spectral-like theories to their networks of products and capabilities.
Despite advances in our understanding of evolution, what drives innovation remains elusive. Technological innovation operates in an expanding space of building blocks, in which combinations of technologies become new technologies. We characterise innovation in a mathematical way, extracting concepts and conservation laws, so that we can predict and influence it.
Organisations have emergent properties and capabilities that we are just coming to terms with. The success of some wikis suggests that many non-interacting agents can produce creative works superior to what any one person could do alone. What is the mathematical basis for collective creativity, and what sectors can we apply it to? Can it be used to speed up discovery in physics and mathematics?
LCP
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Statistical physics contributes to new models and metrics for the study of financial network structure, dynamics, stability and instability.
Risky bank interactions
Networks where risky banks are mostly exposed to other risky banks have higher levels of systemic risk than those with stable bank interactions.
Network valuation in finance
Consistent valuation of interbank claims within an interconnected financial system can be found with a recursive update of banks' equities.
Taming complexity
Insights from biology, physics and business shed light on the nature and costs of complexity and how to manage it in business organizations.
Recursive structure of innovation
A theoretical model of recursive innovation suggests that new technologies are recursively built up from new combinations of existing ones.
Renewable resource management
Modern portfolio theory inspires a strategy for allocating renewable energy sources which minimises the impact of production fluctuations.
The rate of innovation
The distribution of product complexity helps explain why some technology sectors tend to exhibit faster innovation rates than other sectors.
Information asymmetry
Network users who have access to the network’s most informative node, as quantified by a novel index, the InfoRank, have a competitive edge.
From ecology to finance
Bipartite networks model the structures of ecological and economic real-world systems, enabling hypothesis testing and crisis forecasting.
Forecasting technology deployment
Forecast errors for simple experience curve models facilitate more reliable estimates for the costs of technology deployment.
The interbank network
The large-scale structure of the interbank network changes drastically in times of crisis due to the effect of measures from central banks.
The science of strategy
The usefulness of components and the complexity of products inform the best strategy for innovation at different stages of the process.
Modelling financial systemic risk
Complex networks model the links between financial institutions and how these channels can transition from diversifying to propagating risk.
The secret structure of innovation
Firms can harness the shifting importance of component building blocks to build better products and services and hence increase their chances of sustained success.
Debunking in a world of tribes
When people operate in echo chambers, they focus on information adhering to their system of beliefs. Debunking them is harder than it seems.
Bipartite trade network
A new algorithm unveils complicated structures in the bipartite mapping between countries and products of the international trade network.
Pathways towards instability
Processes believed to stabilize financial markets can drive them towards instability by creating cyclical structures that amplify distress.
Serendipity and strategy
In systems of innovation, the relative usefulness of different components changes as the number of components we possess increases.
Non-linear distress propagation
Non-linear models of distress propagation in financial networks characterise key regimes where shocks are either amplified or suppressed.
Immunisation of systemic risk
Targeted immunisation policies limit distress propagation and prevent system-wide crises in financial networks according to sandpile models.
Optimal growth rates
An extension of the Kelly criterion maximises the growth rate of multiplicative stochastic processes when limited resources are available.
The price of complexity
Increasing the complexity of the network of contracts between financial institutions decreases the accuracy of estimating systemic risk.
Cascades in flow networks
Coupled distribution grids are more vulnerable to a cascading systemic failure but they have larger safe regions within their networks.
Self-organising adaptive networks
An adaptive network of oscillators in fragmented and incoherent states can re-organise itself into connected and synchronized states.
Predicting technological progress
A formulation of Moore’s law estimates the probability that a given technology will outperform another at a certain point in the future.
News sentiment and price dynamics
News sentiment analysis and web browsing data are unilluminating alone, but inspected together, predict fluctuations in stock prices.
Communities in networks
A new tool derived from information theory quantitatively identifies trees, hierarchies and community structures within complex networks.
Effect of Twitter on stock prices
When the number of tweets about an event peaks, the sentiment of those tweets correlates strongly with abnormal stock market returns.
Democracy in networks
Analysis of the hyperbolicity of real-world networks distinguishes between those which are aristocratic and those which are democratic.
Collective attention to politics
Tweet volume is a good indicator of political parties' success in elections when considered over an optimal time window so as to minimise noise.
DebtRank and shock propagation
A dynamical microscopic theory of instability for financial networks reformulates the DebtRank algorithm in terms of basic accounting principles.
Fragility of the interbank network
The speed of a financial crisis outbreak sets the maximum delay before intervention by central authorities is no longer effective.
Dynamics of economic complexity
Dynamical systems theory predicts the growth potential of countries with heterogeneous patterns of evolution where regression methods fail.
Taxonomy and economic growth
Less developed countries have to learn simple capabilities in order to start a stable industrialization and development process.
Networks of credit default swaps
Time series data from networks of credit default swaps display no early warnings of financial crises without additional macroeconomic indicators.
Easily repairable networks
When networks come under attack, a repairable architecture is superior to, and globally distinct from, an architecture that is robust.
Memory effects in stock dynamics
The likelihood of stock prices bouncing on specific values increases due to memory effects in the time series data of the price dynamics.
Self-healing complex networks
The interplay between redundancies and smart reconfiguration protocols can improve the resilience of networked infrastructures to failures.
Structural imperfections
Fractal structures need very little mass to support a load; but for current designs, this makes them vulnerable to manufacturing errors.
Default cascades in networks
The optimal architecture of a financial system is only dependent on its topology when the market is illiquid, and no topology is always superior.
Metrics for global competitiveness
A new non-monetary metric captures diversification, a dominant effect on the globalised market, and the effective complexity of products.
Measuring the intangibles
Coupled non-linear maps extract information about the competitiveness of countries to the complexity of their products from trade data.
The temperature of networks
A new concept, graph temperature, enables the prediction of distinct topological properties of real-world networks simultaneously.
Gentle loads
The most efficient load-bearing fractals are designed as big structures under gentle loads, a common situation in aerospace applications.
Interbank controllability
Complex networks detect the driver institutions of an interbank market and ascertain that intervention policies should be time-scale dependent.
Reconstructing credit
New mathematical tools can help infer financial networks from partial data to understand the propagation of distress through the network.
Complex derivatives
Network-based metrics to assess systemic risk and the importance of financial institutions can help tame the financial derivatives market.
Organized knowledge economies
The Yule-Simon distribution describes the diffusion of knowledge and ideas in a social network which in turn influences economic growth.
Ultralight fractal structures
The transition from solid to hollow beams changes the scaling of stability versus loading analogously to increasing the hierarchical order by one.
Network analysis of export flows
Network theory finds unexpected interactions between the number of products a country produces and the number of countries producing each product.
Metric for fitness and complexity
A quantitative assessment of the non-monetary advantage of diversification represents a country’s hidden potential for development and growth.
Search queries predict stocks
Analysis of web search queries about a given stock, from the seemingly uncoordinated activity of many users, can anticipate the trading peak.
Single elimination competition
In single elimination competition the best indicator of success is a player's wealth: the accumulated wealth of all defeated players.