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Probability II / Branching Processes

Criticality: Subcritical, Critical, and Supercritical Regimes

The previous lesson established the single-number dichotomy at the heart of branching-process theory: extinction is certain if μ≤1\mu\le1, and merely possible if μ>1\mu>1. This note names the three resulting regimes — subcritical, critical, supercritical — and looks at what distinguishes them beyond the single fact of certain-vs-possible extinction: how fast the subcritical process dies, why the critical case is a knife-edge, and how the supercritical process's growth is tamed into a genuine limiting random variable.
Learning objectives. By the end of this note you should be able to:
  • classify a branching process into one of the three criticality regimes from its offspring mean;
  • describe the qualitatively different long-run behaviour in each regime;
  • view the Galton-Watson chain's degenerate stationary structure through the lens of Markov chain classification;
  • connect the criticality threshold to a finance-facing contagion/cascade interpretation.

In this lesson

  1. The three regimes
  2. The Galton-Watson chain as a degenerate Markov chain
  3. Supercritical growth: taming the explosion
  4. Finance interpretation: cascades and criticality

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