Artificial Intelligence and Systemic Risk: A Unified Model of Performative Prediction, Algorithmic Herding, and Cognitive Dependency in Financial Markets

arXiv:2604.03272v1 Announce Type: cross Abstract: We develop a unified model in which AI adoption in financial markets generates systemic risk through three mutually reinforcing channels: performative prediction, algorithmic herding, and cognitive dependency. Within an extended rational expectations framework with endogenous adoption, we derive an equilibrium systemic risk coupling $r(\phi) = \phi\rho\beta/\lambda'(\phi)$, where $\phi$ is the AI adoption share, $\rho$ the algorithmic signal corr