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We extend the well-known Cont-Bouchaud model to include a hierarchical topology of agents interactions. The influence of hierarchy on system dynamics is investigated by two models. The first one is based on a multi-level, nested Erdos-Renyi random graph and individual decisions by agents according to Potts dynamics. This approach does not lead to a broad return distribution outside a parameter regime close to the original Cont-Bouchaud model. In the second model we introduce a limited hierarchical Erdos-Renyi graph, where merging of clusters at a level h+1 involves only clusters that have merged at the previous level h and we use the original Cont-Bouchaud agent dynamics on resulting clusters. The second model leads to a heavy-tail distribution of cluster sizes and relative price changes in a wide range of connection densities, not only close to the percolation threshold.
In this paper we discuss some features of the BCRE model. We show that this model can be understood as a mapping from a two-dimensional to a one-dimensional problem, if some conditions are satisfied. We propose some modifications that (a) guarantee m
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Groups of people or even robots often face problems they need to solve together. Examples include collectively searching for resources, choosing when and where to invest time and effort, and many more. Although a hierarchical ordering of the relevanc
We introduce the concept of control centrality to quantify the ability of a single node to control a directed weighted network. We calculate the distribution of control centrality for several real networks and find that it is mainly determined by the