Towards evolutionary game models of financial markets

Evolutionary game models analyse strategic interaction over time; equilibrium emerges (or fails to emerge) as players/traders adjust their actions in response to the payoffs they earn. This paper sketches some early and some recent evolutionary game models that contain ideas useful in modelling financial markets. It spotlights recent work on adaptive landscapes. In an extended example, the distribution of player/trader behaviour obeys a variant of Burgers' partial differential equation, and solutions involve travelling shock waves. It is conjectured that financial market crashes might insightfully be modelled in a similar fashion.

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