Why Linear (and Piecewise Linear) Models Often Successfully Describe Complex Non-Linear Economic and Financial Phenomena: A Fuzzy-Based Explanation

摘要

Economic and financial phenomena are highly complex and non-linear. However, surprisingly, in many cases, these phenomena are accurately described by linear models -- or, sometimes, by piecewise linear ones. In this paper, we show that fuzzy techniques can explain the unexpected efficiency of linear and piecewise linear models: namely, we show that a natural fuzzy-based precisiation of imprecise (u22fuzzyu22) expert knowledge often leads to linear and piecewise linear models.We also discuss which expert-motivated nonlinear models should be used to get a more accurate description of economic and financial phenomena.