Chaos theory
Chaos Theory explains at least a component of disorderly market behavior in terms of deterministic feedback mechanisms reflected in the rules governing system members’ behavior and interactions. This feedback represents non-linearity and occurs in two forms: (1) the reinforcing growth effect of positive feedback; and (2) the damping effect of negative feedback. Chaos theory also offers alternative explanations for the existence of various types of marketing institutions as 'disequilibrium mechanisms' designed to buffer or reduce the effects of complex dynamics. These include inventory-holding intermediaries, financial intermediaries, insurance agencies, and ordering systems. Finally, Chaos Theory can explain and predict structural change and evolution in marketing systems.