FUTUROSOPHY.COM - FUTUROLOGY and PHILOSOPHY - IDEAS FROM THE FUTURE!



Endogenous Crisis Frequency: A Hypothesis Linking Market Micro-Volatility and Psychological Panic Thresholds

This essay proposes a simple integrative hypothesis: the frequency of economic crises (financial crashes,
currency collapses, commodity panics) is determined endogenously by the ratio of two measurable quantities—the
psychological panic threshold (ΔP) and the background micro-volatility of the market (σ).
Drawing on experimental economics, behavioral finance, critical market dynamics, and macro-history, we argue
that crises are amplified endogenous fluctuations crossing a psychological contagion barrier, not merely responses
to exogenous shocks. A simple power-law relation Tcrisis ∝ (ΔP / σ)α (with α ≈ 3–4) provides first-order estimates
consistent with observed crisis frequencies across developed and emerging markets, as well as for non-monetary
(barter) economies. We invite formal modeling and rigorous empirical testing.



FUTUROSOPHY.RU



SSNR