Hierarchical analysis is considered and a novel, multilevel model is presented in order to explore causality, chance and complexity in financial economics. A coupled system of models is used to describe multilevel interactions, consistent with market data: the top-level is described by shared risk factors, the next level combines shared risk factors with information variables and bottom-up agent generated structurebased on the framework of arbitrage pricing theory, the lowest level is that of agents generating the prices of individual traded assets and a mechanism for emergence or innovation is considered . Concepts in the hierarchy of complexity are interrogated via five causation classes and the concept of actors, who serve as exemplars for types of causation, is reviewed .
Hierarchical analysis is considered and a multilevel model is presented in order to explore causality, chance and complexity in financial economics. A coupled system of models is used to describe multilevel interactions, consistent with market data: the lowest level is occupied by agents generating the prices of individual traded assets; the next level entails aggregation of stocks into markets; the third level combines shared risk factors with information variables and bottom-up , agent-generated structure, consistent with conditions for no-arbitrage pricing theory; the fourth level describes market factors which originate in the greater economy and the highest levels are described by regulated market structure and the customs and ethics which define the nature of acceptable transactions. A mechanism for emergence or innovation is considered and causal sources are discussed in terms of five causation classes .
D
novel,
R
top-level is described by shared risk factors, the next level
lowest level is occupied by agents generating the prices of individual traded assets; the next level entails aggregation of stocks into markets; the third level
R
agent generated structurebased on the framework of arbitrage pricing theory, the lowest level is that of agents generating the prices of individual traded assets and a
, agent-generated structure, consistent with conditions for no-arbitrage pricing theory; the fourth level describes market factors which originate in the greater economy and the highest levels are described by regulated market structure and the customs and ethics which define the nature of acceptable transactions. A
R
. Concepts in the hierarchy of complexity are interrogated via
and causal sources are discussed in terms of
D
and the concept of actors, who serve as exemplars for types of causation, is reviewed