Comparative Analysis of Mathematical Models in Epidemiology - There Adaptation to Explain Herding in Financial Markets

Abstract

There are different approaches in the use of mathematical model to explain the spread of infectious disease. In epidemiological study the models like Cox,B Spline, SIR and Transmission probability are used to explain herding effect. Bulk of the studies shows the use of these models in Epidemiological research. This paper tries to find the rational of choosing particular models. The collected data sample could be left truncated, right truncated, interval censured and similarly the approximation required to fit the dataset in models could be different. This paper tries to find out the appropriate model which can be used to describe herding phenomena in case of financial market. One of the key finding is that it is better to use B spline model due to the present of left truncated data in a stock market crash or in a bank run.