Nathan Rowley, Chapter 7, Question 6

Reading about financial markets has made me realize that markets, despite being entirely contrived by humanity, mirror systems in nature in interesting ways. The section about financial markets correcting themselves in the event of an anomaly reminded me of the common side-blotched lizard. The lizard comes in three colors: orange, yellow, and blue. The orange lizards are big and can guard large groups of females. The blue lizards are of medium size and typically guard only a single female. The yellow lizards are the smallest and don't guard a territory; they pretend to be females to get into the territories of other lizards. When there are a lot of orange lizards, the yellow ones will have more success, because it is easier to sneak into large territories. When there are a lot of yellow lizards, the larger blues can keep them away from their mates. When there are a lot of blues, the oranges can use their strength to steal mates. The system self-corrects as the populations of each color change.

So it is in financial markets, according to the efficient market theory. Perhaps the study of nature and evolution could lend itself to solving some of our economic issues.