Market crashes aren't just bad luck—they're what happens when the math of the market literally runs out of room to move.
Rather than blaming crashes on irrational people, this paper models markets as geometric shapes that occasionally 'collapse' when a single narrative becomes too dominant. In these moments, the math of the system forces everyone to act in sync, meaning individual choice actually disappears until a circuit breaker restores 'dimensionality' to the market.
Market Behavior: The Structural Drivers of Bubbles and Panics
SSRN · 6206138
Financial markets routinely transition between stable and unstable regimes, yet traditional explanations-irrational behavior, exogenous shocks, or information imperfections-fail to account for the structural coherence of bubbles, panics, and liquidity crises. This paper presents a unified framework in which markets are modeled as orientation-sensitive manifolds whose stability depends on the dimensionality of the trajectories available to participants. We identify presentation-driven trajectory