Evolutionary Finance Approach:Literature Survey

Abstract

The only way to make a major advance in finance modeling is to explore entirely new approaches rather than make incremental modifications to existing models. The purpose of our research is precisely to build models and perform analysis of the economy as a complex system prone to sudden and major changes. This includes the collection of new methods of empirical analysis, and the development of new mathematical and computational tools. This effort will be guided by emerging new conceptual paradigms such as network theory, behavioral economics and agent-based modeling, and empirically grounded by laboratory experiments and micro data. By combining these ideas into a practical simulation and forecasting tool, we aim at building the foundations of a new paradigm within finance.