Economic fluctuations and statistical physics: Quantifying extremely rare and less rare events in finance

One challenge of economics is that the systems treated by these sciences have no perfect metronome in time and no perfect spatial architecture—crystalline or otherwise. Nonetheless, as if by magic, out of nothing but randomness one finds remarkably fine-tuned processes in time. We present an overview of recent research joining practitioners of economic theory and statistical physics to try to better understand puzzles regarding economic fluctuations. One of these puzzles is how to describe outliers, phenomena that lie outside of patterns of statistical regularity. We review evidence consistent with the possibility that such outliers may not exist. This possibility is supported by recent analysis of databases containing information about each trade of every stock.