Notice this

You can not build a true random generator

Just better or worse simulators of random generation

Is a market system stocastic or chaotic ?

Subject to randomly generate shocks

Or simply a bunch of more or less bad random generators

Ie chaotic systems

Brock again

" The problem is that empirically it is hard to distinguish between

a stochastic system

and

chaos buffeted by noise. " " noise ??

Let's pretend he didn't add that ...

".....take a random number generator.

To test whether a random number generator is any good, e.g. whether it genera- tes numbers that are totally unpredictable, you can let it generate a series of drawings from a uniform(0,1) distribution. "

" If you plot xt against xt+1 with a series of 100,000 the unit square should fill up completely. "

"So the plot should look uniformly grey."

" But in practice, this kind of plots with drawings from a number generator will look like snowflakes."

" They will fill out the square, but you will see some patterns. "

" This means that some random number generators are lousy."

If the generated num- bers kind of fill out the cube, without sub pat- terns, you have got a good random number ge- nerator.

But some will create patterns inside the cube which you can see with your naked eye.

This implies there is some kind of predictability. You can use xt and xt-1 to make a forecast about xt+1, so it is not random.