Complex Adaptive Systems: An Introduction to Computational Models of Social Life (Princeton Studies in Complexity Book 14)

by John H. Miller

Clearly there are systems, for example, stock markets, in which agents actively adapt and alter the fundamental behavior of the system and, in so doing, force it into new realms of activity. Thus, if stock markets are too predictable, then we would expect adaptation to create agents that can exploit this feature. The emergence of such agents should wipe out the predictability and push the system toward a more chaotic regime (which is essentially the argument driving the efficient-market hypothesis). However, once the market is completely chaotic, the selective pressures on agent behavior become quite neutral, and predictability might again slip back into the system.