New Delhi, Sept. 8 -- People panic. And even more so when they see other people panic. It could be a rush for the exits when someone spreads a rumour about a fire in a closed hall or a scramble to withdraw money from a bank that is feared to be running out of cash.

Financial instability can be triggered by investor concerns about the economic situation, the actions of other investors who may be prone to panic, or both. It is actually rational to get ahead of the crowd in many such situations, even when one has a calmer view of the underlying reality. Can artificial intelligence (AI) agents do better?

Earlier this year, four economists at the European Central Bank published a paper that goes into this question (Ex Machina: Financial Stab...