Model Collective Behavior?

Take a look at the next picture:

It's clear that the little fish here, have a problem.

What's also clear, is that random actions of an individual fish are not likely going to change the situation.


In the next picture, by coordinating behavior, a way has been found to solve 'the problem' :



This solution looks very simple, the question is how to organize this kind of collective "big fish" behavior?

The problem is that often first movers will not benefit from a collective approach:

It turns out that one way to get individuals to coordinate their behavior is through morality.

Interested?
In an excellent essay called A Business Plan for Catalyzing Collective Action , The Point explanes how how these cooperative mechanisms can be created.

Actuarial Models
Collective (organizing) mechanisms are important stuff for actuaries. For example, they play an essential role with regard to all kind of solidarity aspects in pension- and insurance-contracts.

Moreover, collective rational or even emotional behavior often plays a decisive role in our society, as may be clear from the 2009 credit crisis turmoil and the escalating bonus madness.

Be aware, study "collective behavior mechanisms" and take them into account when you set up your actuarial risk model.

EU Banks : US $ 8 Trillion assets

Are European banks desperate to avoid recognizing a possible loss on their 8 Trillion Dollar US-Holding assets?


US assets, owned by European banks, increased from $2 trillion in 1999 to around $8 trillion in 2009.

In 2008 the Fed lent $600 billion to European central banks to make up for collapse of dollar funding from US money market funds.



What do, as an actuary, make up from this?

Interested? Read more about this possible time bomb at:

Market Skeptics

Moreover the Fed moves that would more than double its balance-sheet assets by September to $4.5 trillion from $1.9 trillion.

This will imply a 15-Fold Increase In US Monetary Base in September 2009.

"Trust" will be a key word in 2009!

Credit Crisis Visualized

As an actuary, your friends or family often ask you to explain the credit crisis in simple words.

Questions like: Mr. Actuary, what is a CDO?

Don't waste any more time explaining, just show them the next Vimeo.



The Crisis of Credit Visualized from Jonathan Jarvis.

Saves you hours of explaining.....