The behavior of economics systems often is puzzling and seems to be
“unpredictable”. It is – more often than not – different from the total sum of the
behavior of the individuals in it. Econophysics views the economics systems as complex systems consisting of many interacting agents. The econophysics models are borrowed from physics and mathematics, e.g. lattice gas models, droplet theory, network theory, brownian dynamics, statistics, monte carlo simulations, fractal theory, chaos theory, and many more.
It is known that the dynamics of an economics system shows volatility clustering.
Using the droplet theory as a thinking tool, we search for the explanations of how the
interactions between the agents can give rise to the volatility clustering. An agents based her decisions on many factors: the decisions of other agent, her personal preference, information about the global condition, interaction with other agents
with opposite opinions, and many more. Based on those individual factors, we construct
“droplets of agents”. The morphology and dynamics of the droplets become the generator
of the volatility clustering. Essentially, the dynamics of the droplets – individual dynamics of the droplets and interactions between them – create the collective behavior of the system.