No more of a tautology than most math approaches. Stripping away the fancy math (that comes from Otto Rossler, one of the godfathers of chaos theory), it is basically a way of modeling bandwagon speculative outbursts with heterogeneous agents. There will be times when the agents will infect each other with their overoptimism and will overdo it. The mathematics are similar to that which can describe a solar flare shooting out. Conceptually it is not all that different from a lot of purely verbal descriptions of how speculative bubble processes operate.
BTW, leptokurtosis is a stylized fact of most financial markets; they are given to more "extreme events" than would be expected if their returns obeyed a normal distribution. They have "fat tails," which are pretty obviously the ups and downs of the speculative episodes (in my model, the flares and their collapses). Barkley Rosser -----Original Message----- From: Chris Burford <cburford at gn.apc.org> To: lbo-talk at lists.panix.com <lbo-talk at lists.panix.com> Date: Thursday, February 15, 2001 7:26 PM Subject: Volatitily as social flaring
>I'll be off giving a talk at the Atlanta Fed....
>(on "Volatility as Social Flaring," available on my
>website, more creepy chaos theory stuff).
>Barkley Rosser
>
>A few words please, Barkley, to translate your article into more lay
language.
>
>I am generally in favour of your approach although I am left behind by the
>mathematics.
>
>But the groundings appear very speculative and require a lot of cautious
>creeping.
>
>Suppose using social flaring as an explanation for kurtosis is in essence a
>tautology?
>
>
>Chris Burford
>
>Glossary on kurtosis
>
>http://www.contingencyanalysis.com/glossarykurtosis.htm
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