We invite you to watch this video by SciShow in which they discuss mathematical and physical mechanisms behind some complex patterns in nature.

In a previous post we have defined the parliamentary presence and shown that the data from Brazilian and Lithuanian parliaments exhibits anomalous diffusion. Actually we have analyzed Lithuanian data [1], while Brazilian data was considered by Vieira and others [2]. This time let me constructed a voter model to replicate the observations.

Big investors borrowed lots of GameStop stocks in anticipation that the price will drop (they "shorted" the stock). But the price did not drop. The big investors "shorted" further expecting that other market participants would follow suit in selling GameStop stocks. They didn't and then trolls from reddit joined the fray...

No one knows when and how this will end, but some people on reddit will earn a lot. While some big capital investors will hopefully loose a lot and learn a lesson.

Detailed explanation of what is happening in the following video by the TLDR News US.

While my postdoctoral project has already finished (actually it did finish almost a year ago), I still have things related to it I want to discuss here on Physics of Risk. This time let me take an empirical perspective, let me consider parliamentary presence data. Why this data could be interesting to us? Because, it was shown that parliamentary presence in the Brazilian parliament does exhibit anomalous diffusion [1]. And it seems that Lithuanian Seimas does too [2].

Why so many predictions go wrong? In my humble opinion it is because many people fail to understand that complex systems are complex. Namely, there are many variables which can influence the outcome and the relationships between those variables are often not trivial.

In case of predictions for the COVID-19 epidemics, we can't be completely sure how well the social distancing measures will work before they are implemented. We need data, we need some time to observe how the things change after the social distancing measures are implemented. Afterwards we can make a reasonable extrapolations, but they are usually just that - an extrapolation under assumption that things will continue to happen as they are now. In physics such assumption is obvious and justifiable, but social reality might change simply because we made some kind of prediction.

Another excellent point given in the video below by Wisecrack, is that there are two kinds of experts making predictions: foxes and hedgehogs. Foxes are often scientists, who try to be as transparent (explicit about the assumptions they make), open to new data and evidence (which can falsify some of previously held assumptions) as they can. Foxes are prone to changing their mind as they learn from their prior mistakes. Most of the people ignore transparency (because they can't understand assumptions made by a fox) and only notice that such experts often change their opinions. Public appears to favor experts who are adamant about their predictions, because the predictions are often bold and dramatic, yet often backed only by a belief. These experts are known as hedgehogs.

In Lithuania we have a lot of free markets hedgehogs, who often suggest "letting it work" ("laissez faire") as being solution to every imaginable problem. While free markets are solutions to some problems, they are definitely not a solution for all the problems, as free markets are based on theoretical model, which works only when certain assumptions are satisfied (check out our previous series of post on price formation).

So, without any further side points, we invite you to watch a video on Wisecrack. It covers much more than we have written about in the text above.