AUTHOR=Tebaldi Claudio 

TITLE=Self-Organized Criticality in Economic Fluctuations: The Age of Maturity

JOURNAL=Frontiers in Physics

VOLUME=Volume 8 - 2020

YEAR=2021

URL=https://www.frontiersin.org/journals/physics/articles/10.3389/fphy.2020.616408

DOI=10.3389/fphy.2020.616408

ISSN=2296-424X

ABSTRACT=Bak, Chen, Scheinkman and Woodford (1993) and Scheinkman and Woodford
(1994), hypothesize that emergence of macro-financial fluctuations reflects
an underlying self-organized critical state. The wave of innovative thinking
sparked by their proposal continues to produce interesting contributions
in many areas of economics, ranging from macroeconomics to finance. In this
review, we propose a guided tour to these achievements highlighting that
analysis of self-organized critical equilibria is a promising avenue to
establish a nexus between i) a statistical equilibrium characterized by the
spontaneous emergence of dynamic critical fluctuations and ii) a strategic
equilibrium concept modeling a large number of interacting players, like
firms, traders, or consumers, where the critical state is the stable outcome
arising from a tradeoff between cooperation and competition.