"Econophysics" is getting another look in the aftermath of recent financial crises and market downturns that classically trained economists failed to foresee, according to a column in the Wall Street Journal.
"Other physics-inspired economists, including Doyne Farmer of Oxford University and Blake LeBaron of Brandeis, who were among the developers of the Santa Fe Stock Market Model during their stay at the Santa Fe Institute in the 1990s, have focused on what’s known as 'agent models' of market behavior," writes Michael Casey in his FX Horizons column. "Over two decades they’ve refined these models by inputting and tweaking thousands of different trading strategies and theories that they assign to hypothetical actors in a computerized version of the market. Over time, these systems have grown to perform very much like real-world markets...A number of investors are now applying these approaches to their investment strategies."
Read the article in the Wall Street Journal (July 10, 2013)