| Theory | Mechanism | Explicitly cited in |
|---|
| Modern Portfolio Theory | Correlation and contagion depend on the portfolio variability, such that high stress means a widely distributed shock | @hollo2012, @kremer2021, @chavleishvili2023, @fava2024 |
| Financial Accelerator Theory | A sufficiently large perturbation may impair economic activity, which retroactively amplifies its severity and range of effect | @cardarelli2011, @hollo2012, @evgenidis2017 |
| Heterogeneous Market Hypothesis | Shocks may result from volatility clustering and aggregation, which increases uncertainty | @bonato2024 |
| Rare Disasters Theory | The possibility of disasters may precipitate shocks by risk-aversive behaviors among financial agents | @fava2024 |
| Knightian Uncertainty Theory | Unprecedented events cannot be forecasted due to limited data, which increases market volatility | @hakkio2009 |
| Real Option Theory | Uncertainty and volatility decreases real options, leading to market disfunction and stagnation | @mundra2021 |
| Prospect Theory | Loss aversion is related to asymmetric reactions to positive and negative events, which increases shock distribution | @rooj2025 |
