Economic crashes happen because we only see the market in 'snapshots' instead of seeing the whole, smooth picture.
March 20, 2026
Original Paper
The Discontinuity of Observation: A Theory of Collective Blindness in Economic Crises
SSRN · 6332159
The Takeaway
The paper argues that systemic risk doesn't just grow in the data; it accumulates specifically in the unobservable 'voids' between the moments we check on the system. This makes crises invisible until the moment of collapse, not because of bad math, but because of the structure of human observation.
From the abstract
This paper proposes a novel framework for understanding economic crises. It argues that the fundamental problem lies not in the system itself, nor in the errors of individual agents, but in the structure of observation. We introduce the concept of Observer Discontinuity: economic agents perceive reality not as a continuous stream, but as discrete, asynchronous fragments. Between these fragments lie unobservable voids where systemic risk accumulates and evolves.<br><br>Through a combination of ma