Black swans and dragon kings: A unified model

The term "black swan" is a metaphor for outlier events whose statistics are characterized by Pareto's Law and by Zipf's Law; namely, statistics governed by power-law tails. The term "dragon king" is a metaphor for a singular outlier event which, in comparison with all other outlier events, is in a league of its own. As an illustrative example consider the wealth of a family that is sampled at random from a medieval society: the nobility constitutes the black-swan category, and the royal family constitutes the dragon-king category. In this paper we present and analyze a dynamical model that generates, universally and jointly, black swans and dragon kings. According to this model, growing from the microscopic scale to the macroscopic scale, black swans and dragon kings emerge together and invariantly with respect to initial conditions. Copyright (C) EPLA, 2017