Financial markets as adaptative ecosystems
  We show, by studying in detail the market prices of options on liquid markets, that the market has empirically corrected the simple, but inadequate Black-Scholes formula to account for two important statistical features of asset fluctuations: `fat tails' and correlations in the scale of fluctuations. These aspects, although not included in the pricing models, are very precisely reflected in the price fixed by the market as a whole. Financial markets thus behave as rather efficient adaptive systems. 
Marc Potters (1), Rama Cont (1,3) and Jean-Philippe Bouchaud (2,1)   ((1) Science & Finance (2) CEA Saclay (3) Universite de...