We investigate a simple model of investment recommendations issued by financial analysts in different industries. Financial analysts are influenced by the recommendations of some of their colleagues in the same industry as well as their own recommendations in certain other industries. Describing the relations with other financial analysts and among industries as a graph, we derive the complex dynamics of investment recommendations as relations change over time according to a simple rule, resulting in self-organized criticality. We show that financial analysts are more likely to be optimistic about industries that are unrelated to other industries than about industries that are related to others.
|Title of host publication||The Complex Dynamics of Economic Interaction|
|Subtitle of host publication||Essays in Economics and Econophysics|
|Editors||M. Galegatti, A. Kirman, M. Marsili|
|Place of Publication||London, U. K.|
|Publication status||Published - 2004|
|Name||Lecture Notes in Economics and Mathematical Systems|