Abstract
In previous chapters we have seen the advent of a new society, with the growing complexity of the market and technological innovations. We demonstrated the move away from the Gaussian world towards that of heavy tail distribution.
To fully understand the latter distribution, we need to recognize a generalized central limit theorem, where the Gaussian distribution is simply a special case. We are therefore able to investigate several stable distributions and expand our idea of price equilibrium as a stable distribution. We will also discuss the central issue of how the market economy can generate complex dynamics. We use the trader dynamics system designed by Philip Maymin, and recreate his simulation dynamics for an automaton. This explicitly takes into account traders’ decisions in combined multiple layers: actions, mind states, memories of the trader and the market. These factors are normally regarded as influential components that govern price movements. In financial transactions, we dispense with psychological effects at individual and aggregate levels. These may no longer be secondary effects.6.1
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