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http://www.usnews.com/usnews/issue/980803/3bean.htm

The tulip mania is one of the most celebrated and dramatic bubbles in history. It involved the rise of the tulip bulbs prices in 1637 to the level of average house prices. In the same year, after an increase by a factor of 20 within a month, the market collapsed back within the next 3 months. After loosing a fortune in a similar event (triggered by the South Sea Co.) in 1720 at the London Stock, Sir Isaac Newton was quoted to say, "I can calculate the motions of the heavenly bodies, but not the madness of people."

http://www.morevalue.com/glossary/restrict/EMH-Bubbles.html

It might seem over-ambitious to try where Newton has failed but let us not forget that we are 300 years later, have big computers and had plenty of additional opportunities to contemplate the madness of people.

One finds that global 'macroscopic' (and often "catastrophic") economic phenomena are generated by reasonably simple buy and sell 'microscopic' operations.

Much attention was paid lately to the sales dynamics of marketable products. Large amounts of data has been collected describing the propagation and extent of sales of new products, yet only lately one started to study the implications of the autocatalytic multi-agent reaction-diffusion formalism in describing the underlying “microscopic” process .

As examples to the 'macroscopic' phenomena displayed by the process of product marketing we could take:

• Sudden death - the total and almost immediate disappearing of a product due to the introducing of a new generation better product
• Wave-fronts - the geographical spreading of new products through the markets in the shape of spatio-temporal waves [Bettelheim et al.]
• The larger profit of the second producer of a new product after the failure (or limited success) of the first producer to introduce it [Goldenberg et al.].
• The fractal aspect of the early sales distribution as a predictor for the success of the campaign.
• The role of negative-word-of-mouth in blocking otherwise successful campaigns.

All thse phenomena can be traced of various conditions acting withn the basic framework of the autocatalytic reactions-diffusion multi-agent systems governed by microscopic interactions of the autocatalysis equation 1-3 type.

Beyond the generic scientific and historical importance of those studies, they are of crucial importance for the stability and viability of certain industries. An exaple that was studied in detail was the "Tamagotchi ' craze which months after taking the world by storm resulted in the next financial year in severe losses 4 times larger than the projected profits.

The opposite phenomenon could happen as well though it would never make the news: that a company closes a certain unpopular production line just months before a great interest in the product would have re-emerged (this in fact seems to have happened to the Firebird Pontiac). It is therefore possible that Microscopic Simulation might become soon a marketing and production planning tool in the hands of the macro-economists.

Next: Stochastic logistic systems yield scaling and intermittent fluctuations
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