Dynamics of Social Influence and Knowledge in Networks: Sociophysics Models and Applications in Social Trading, Behavioral Finance and Business

In this paper we offer a comprehensive review of Sociophysics, focusing on relevant models as well as selected applications in social trading, behavioral finance and business. We discuss three key aspects of social diffusion dynamics, namely Opinion Dynamics (OD), Group Decision-Making (GDM) and Knowledge Dynamics (KD). In the OD case, we highlight special classes of social agents, such as informed agents, contrarians and extremists. As regards GDM, we present state-of-the-art models on various kinds of decision-making processes. In the KD case, we discuss processes of knowledge diffusion and creation via the presence of self-innovating agents. The primary question we wish to address is: to what extent does Sociophysics correspond to social reality? For that purpose, for each social diffusion model category, we present notable Sociophysics applications for real-world socioeconomic phenomena and, additionally, we provide a much-needed critique of the existing Sociophysics literature, so as to raise awareness of certain issues that currently undermine the effective application of Sociophysics, mainly in terms of modelling assumptions and mathematical formulation, on the investigation of key social processes.