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... Self-organization of individuals is observed in many systems and is a cornerstone of complexity sciences. [1][2][3][4] Mutual cooperation between agents exists in many forms, one such being insurance. The insurance industry is one of the largest industries in the modern economy and has existed for centuries. ...
Cooperation between individuals is emergent in all parts of society; yet, mechanistic reasons for this emergence are ill understood in the literature. A specific example of this is insurance. Recent work has, though, shown that assuming the risk individuals face is proportional to their wealth and optimizing the time average growth rate rather than the ensemble average results in a non-zero-sum game, where both parties benefit from cooperation through insurance contracts. In a recent paper, Peters and Skjold present a simple agent-based model and show how, over time, agents that enter into such cooperatives outperform agents that do not. Here, we extend this work by restricting the possible connections between agents via a lattice network. Under these restrictions, we still find that all agents profit from cooperating through insurance. We, though, further find that clusters of poor and rich agents emerge endogenously on the two-dimensional map and that wealth inequalities persist for a long duration, consistent with the phenomenon known as the poverty trap. By tuning the parameters that control the risk levels, we simulate both highly advantageous and extremely risky gambles and show that despite the qualitative shift in the type of risk, the findings are consistent.
... Despite the instability and contingency of sin~le events, the fabric of society is perceived as a coherent stream of conversation wh1ch reproduces itself continuously through new communication events. The "system" consists of language, and it is organized as a play, i.e. as a self-organizing process of selfreferential communication acts (Hutter 1990). In our society's history, religion was the only accepted self-sufficient play, the only source of "ultimate meaning" until the 16th century. ...
So far, the world has been dealing with certainty, orderliness, and stability in the social and economic systems. The system in question—social or economic—was taken as a single homogeneous structure. These have defined the thoughts about the method of inquiry and policy and economic theories. In contrast, social and economic systems consisting of real-world problems are complex. A system is called complex when it comprises multiple interconnected elements, parts, or subsystems, and their interactions and feedback loops determine the behavior of the system or economy. It is the interaction between elements that matters. Studying the policy system or economy as a single structure may not provide a reasoned approach. Though challenging, understanding complexity can add an advantage by realizing the hidden potential of interacting elements. For over a century, scholarly research about complexity has brought to the fore concepts that were not realized before. The research in complexity economics at Santa Fe Institute has made a significant contribution since the 1980s. The deeper understanding has added characteristics, such as the interactive nature of elements, emergence, adaptation, evolution, and path dependency, to examine a complex system. Understanding them assumes importance in exploring new approaches and strategies for better policymaking, managing the economy, and meeting the challenges of the twenty-first century.
This study investigates how structural change that leads to increasing output variety was gradually perceived by economists and eventually incorporated into models of economic growth. We trace the evolution of growth models from exclusively macroeconomic models to those that include micro and meso levels of aggregation, and further, to those that permit explicit and endogenous representation of innovation and technological change. We consider the structure of an economic system as constituted by (i) a variable number of industrial sectors producing highly diversified goods and services, (ii) an increasing range of other activities, such as education or healthcare—which, while not being strictly economic, interact heavily with industrial sectors, and (iii) a series of interactions between these sectors and activities, the intensity of which can vary in the course of economic development. As a consequence, structural change consists of (i) the emergence of new sectors and activities and the reduction or extinction of older ones, (ii) increase in quality and differentiation of sectoral output, and (iii) the changing interactions between industrial sectors and other activities. In this paper, structural change is not considered an epiphenomenon of economic development but one of its fundamental mechanisms, since the emergence of new sectors and activities and their internal diversification contribute to overcoming the development bottleneck. This type of structural change gives rise to a growing diversification of the system through the co-evolution of industrial sectors, other activities, technologies, and institutions. This growing diversification of economic systems has recently been confirmed by an abundance of research, both theoretical and empirical: those studies are examined and analyzed in detail here.
Stock market index is a tool used by the investors to determine the market and compare to return on some certain investments. Many studies have been conducted aimed at investigating the relationship between stock market index and macroeconomic fundamentals. However, only a few studies investigated the Sharia stock index. This study investigated the long-term and short-term relationship between Indonesian Sharia Stock Index (ISSI) as the dependent variable and macroeconomic fundamentals as the independent variables comprising Consumer Price Index (CPI)-the proxy for inflation rate, interest rate, exchange rate, and money supply. The method used to investigate the long-term and short-term relationship was Vector Error Correction Model (VECM). Before using VECM, Johansen’s Co-integration Test was used to test the co-integration relationship between the dependent and independent variables. The result of showed that there is a long-term relationship, but no short-term relationship between those variables was found. The result of both tests revealed significant relationship between dependent variable and independent variables. However, the variable of CPI was insignificant in influencing ISSI. The conclusion is that ISSI reacts positively towards interest rate and money supply while high depreciation of Rupiah will potentially create difficulty towards the market conditions in a long-term.
This study aims to investigate whether the conventional and Islamic stock returns are subject to different calendar anomalies by testing the monthly calendar effects on stock returns in both markets. Focusing on the Indonesian and Malaysian Stock Markets, the closing monthly prices of the Jakarta Stock Exchange Index (JKSE), Kuala Lumpur Stock Exchange Index (KLSE), Jakarta Islamic Index (JII) and FTSE Bursa Malaysia Hijrah Shariah Index (FBMHS) were considered covering the period from 2004 to 2015. An independent sample of t-test is adopted to explore the differences between the conventional and Islamic stock returns in both countries, while the calendar effects of the stock returns is then tested using the multiple regression. The study finds that there were no differences between the conventional and Islamic stock returns, and the calendar anomaly is only existed in the Indonesian stock markets. This implies that although both the conventional and Islamic stock markets have been well integrated in both markets, the stock markets of Malaysia have been more efficient than the Indonesian counterpart.