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At least 19 recordsLinked to original sources

arXiv2014

A General Equilibrium Theorem for the Economy of Giving

In [1] we presented a model for transactions when goods are given away in the expectation of a later settlement. In settings where people keep track of their social accounts we were able to redefine concepts like account balance, yield curve and the law of diminishing returns. In this paper we establish a general equilibrium theorem, conjectured in [1], by developing sufficient conditions for any instance of the standard model (or Gift Economy Model) to have a unique equilibrium. The convergence to that equilibrium is exponential and for each pair of entities P and Q the total sum of yields from all mutual transactions is equal to zero. [1] W.P. Weijland, Mathematical Foundations for the Economy of Giving, ArXiv Categories: q-fin.GN, Report 1401.4664, 2014.

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arXiv2007

EGT through Quantum Mechanics & from Statistical Physics to Economics

By analyzing the relationships between a socioeconomical system modeled through evolutionary game theory and a physical system modeled through quantum mechanics we show how although both systems are described through two theories apparently different both are analogous and thus exactly equivalents. The extensions of quantum mechanics to statistical physics and information theory let us use some of their definitions for the best understanding of the behavior of economics and biology. The quantum analogue of the replicator dynamics is the von Neumann equation. A system in where all its members are in Nash equilibrium is equivalent to a system in a maximum entropy state. Nature is a game in where its players compete for a common welfare and the equilibrium of the system that they are members. They act as a whole besides individuals like they obey a rule in where they prefer to work for the welfare of the collective besides the individual welfare.

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arXiv2007

The log-normal distribution from Non-Gibrat's law in the middle scale region of profits

Employing profits data of Japanese firms in 2003--2005, we kinematically exhibit the static log-normal distribution in the middle scale region. In the derivation, a Non-Gibrat's law under the detailed balance is adopted together with following two approximations. Firstly, the probability density function of profits growth rate is described as a tent-shaped exponential function. Secondly, the value of the origin of the growth rate distribution divided into bins is constant. The derivation is confirmed in the database consistently. This static procedure is applied to a quasi-static system. We dynamically describe a quasi-static log-normal distribution in the middle scale region. In the derivation, a Non-Gibrat's law under the detailed quasi-balance is adopted together with two approximations confirmed in the static system. The resultant distribution is power-law with varying Pareto index in the large scale region and the quasi-static log-normal distribution in the middle scale region. In the distribution, not only the change of Pareto index but also the change of the variance of the log-normal distribution depends on the parameter of the detailed quasi-balance. As a result, Pareto index and the variance of the log-normal distribution are related to each other.

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arXiv2007

Utility Maximization with a Stochastic Clock and an Unbounded Random Endowment

We introduce a linear space of finitely additive measures to treat the problem of optimal expected utility from consumption under a stochastic clock and an unbounded random endowment process. In this way we establish existence and uniqueness for a large class of utility maximization problems including the classical ones of terminal wealth or consumption, as well as the problems depending on a random time-horizon or multiple consumption instances. As an example we treat explicitly the problem of maximizing the logarithmic utility of a consumption stream, where the local time of an Ornstein-Uhlenbeck process acts as a stochastic clock.

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arXiv2007

Rent seeking games with tax evasion

We consider the static and dynamic models of Cournot duopoly with tax evasion. In the dynamic model we introduce the time delay and we analyze the local stability of the stationary state. There is a critical value of the delay when the Hopf bifurcation occurs.

math.DS↗

arXiv2007

Hiking the hypercube: producers and consumers

We study the dynamics of co-evolution of producers and customers described by bit-strings representing individual traits. Individual ''size-like'' properties are controlled by binary encounters which outcome depends upon a recognition process. Depending upon the parameter set-up, mutual selection of producers and customers results in different types of attractors, either an exclusive niches regime or a competition regime.

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arXiv2007

Heterogeneity and Increasing Returns May Drive Socio-Economic Transitions

There are clear benefits associated with a particular consumer choice for many current markets. For example, as we consider here, some products might carry environmental or `green' benefits. Some consumers might value these benefits while others do not. However, as evidenced by myriad failed attempts of environmental products to maintain even a niche market, such benefits do not necessarily outweigh the extra purchasing cost. The question we pose is, how can such an initially economically-disadvantaged green product evolve to hold the greater share of the market? We present a simple mathematical model for the dynamics of product competition in a heterogeneous consumer population. Our model preassigns a hierarchy to the products, which designates the consumer choice when prices are comparable, while prices are dynamically rescaled to reflect increasing returns to scale. Our approach allows us to model many scenarios of technology substitution and provides a method for generalizing market forces. With this model, we begin to forecast irreversible trends associated with consumer dynamics as well as policies that could be made to influence transitions

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arXiv2007

Nurturing Breakthroughs: Lessons from Complexity Theory

A general theory of innovation and progress in human society is outlined, based on the combat between two opposite forces (conservatism/inertia and speculative herding "bubble" behavior). We contend that human affairs are characterized by ubiquitous ``bubbles'', which involve huge risks which would not otherwise be taken using standard cost/benefit analysis. Bubbles result from self-reinforcing positive feedbacks. This leads to explore uncharted territories and niches whose rare successes lead to extraordinary discoveries and provide the base for the observed accelerating development of technology and of the economy. But the returns are very heterogeneous, very risky and may not occur. In other words, bubbles, which are characteristic definitions of human activity, allow huge risks to get huge returns over large scales. We outline some underlying mathematical structure and a few results involving positive feedbacks, emergence, heavy-tailed power laws, outliers/kings/black swans, the problem of predictability and the illusion of control, as well as some policy implications.

physics.soc-ph↗

arXiv2007

The minority game: An economics perspective

This paper gives a critical account of the minority game literature. The minority game is a simple congestion game: players need to choose between two options, and those who have selected the option chosen by the minority win. The learning model proposed in this literature seems to differ markedly from the learning models commonly used in economics. We relate the learning model from the minority game literature to standard game-theoretic learning models, and show that in fact it shares many features with these models. However, the predictions of the learning model differ considerably from the predictions of most other learning models. We discuss the main predictions of the learning model proposed in the minority game literature, and compare these to experimental findings on congestion games.

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arXiv2007

Adaptation and Coevolution on an Emergent Global Competitive Landscape

Notions of Darwinian selection have been implicit in economic theory for at least sixty years. Richard Nelson and Sidney Winter have argued that while evolutionary thinking was prevalent in prewar economics, the postwar Neoclassical school became almost entirely preoccupied with equilibrium conditions and their mathematical conditions. One of the problems with the economic interpretation of firm selection through competition has been a weak grasp on an incomplete scientific paradigm. As I.F. Price notes, "The biological metaphor has long lurked in the background of management theory largely because the message of 'survival of the fittest' (usually wrongly attributed to Charles Darwin rather than Herbert Spencer) provides a seemingly natural model for market competition (e.g. Alchian 1950, Merrell 1984, Henderson 1989, Moore 1993), without seriously challenging the underlying paradigms of what an organisation is." In this paper we examine the application of dynamic fitness landscape models to economic theory, particularly the theory of technology substitution, drawing on recent work by Kauffman, Arthur, McKelvey, Nelson and Winter, and Windrum and Birchenhall. In particular we use Professor Post's early work with John Holland on the genetic algorithm to explain some of the key differences between static and dynamic approaches to economic modeling.

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arXiv2016

Maximum Entropy, the Collective Welfare Principle and the Globalization Process

Although both systems analyzed are described through two theories apparently different (quantum mechanics and game theory) it is shown that both are analogous and thus exactly equivalents. The quantum analogue of the replicator dynamics is the von Neumann equation. Quantum mechanics could be used to explain more correctly biological and economical processes. It could even encloses theories like games and evolutionary dynamics. We can take some concepts and definitions from quantum mechanics and physics for the best understanding of the behavior of economics and biology. Also, we could maybe understand nature like a game in where its players compete for a common welfare and the equilibrium of the system that they are members. All the members of our system will play a game in which its maximum payoff is the equilibrium of the system. They act as a whole besides individuals like they obey a rule in where they prefer to work for the welfare of the collective besides the individual welfare. A system where its members are in Nash Equilibrium (or ESS) is exactly equivalent to a system in a maximum entropy state. A system is stable only if it maximizes the welfare of the collective above the welfare of the individual. If it is maximized the welfare of the individual above the welfare of the collective the system gets unstable an eventually collapses. The results of this work shows that the "globalization" process has a behavior exactly equivalent to a system that is tending to a maximum entropy state and predicts the apparition of big common markets and strong common currencies that will find its "equilibrium" by decreasing its number until they get a state characterized by only one common currency and only one common market around the world.

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arXiv2007

Economic Amplifier - A New Econophysics Model

Most of the econometric and econophysics models have been borrowed from the statistical physics, and as a cosequence, a new interdisciplinary science called econophysics has emerged. In this paper we planned to extend the analogy between different economic processes or phenomena and processes and phenomena from different fields of physics, other than statistical physics. On the basis of the economic development process and amplification phenomenon analogy, a new econophysics model, named economic amplifier, on the electronic amplification principle from applied physics was proposed und largely analyzed.

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arXiv2007

Eduction and Economy -- An Analysis of Statistical Data

In this paper the correlation between education, research and macroeconomic strength of countries at a global scale is analyzed on the basis of statistical data published by the UNIDO and OECD. It uses sets of composite indicators describing the economical performance and competitiveness as well as those relevant for human development, education, knowledge and technology achievement and correlates them. It turns out that for countries with a human development index (HDI) below 0.7 the basic education and technology achievement indices are the driving force for further development, whereas for the industrialized countries the knowledge index as a composite education and communication index has the strongest effect on the economic strength of a country as measured by the gross domestic product.

physics.soc-ph↗

arXiv2007

The public goods game on homogeneous and heterogeneous networks: investment strategy according to the pool size

We propose an extended public goods interaction model to study the evolution of cooperation in heterogeneous population. The investors are arranged on the well known scale-free type network, the Barabási-Albert model. Each investor is supposed to preferentially distribute capital to pools in its portfolio based on the knowledge of pool sizes. The extent that investors prefer larger pools is determined by investment strategy denoted by a tunable parameter $α$, with larger $α$ corresponding to more preference to larger pools. As comparison, we also study this interaction model on square lattice, and find that the heterogeneity contacts favors cooperation. Additionally, the influence of local topology to the game dynamics under different $α$ strategies are discussed. It is found that the system with smaller $α$ strategy can perform comparatively better than the larger $α$ ones.

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arXiv2008

Analytical modelling of terminal properties in industrial growth

In this pedagogical study, carried out by adopting standard mathematical methods of nonlinear dynamics, we have presented some simple analytical models to understand terminal behaviour in industrial growth. This issue has also been addressed from a dynamical systems perspective, with especial emphasis on the concept of the Balanced Scorecard. Our study enables us to make the general claim that although the fortunes of an industrial organization can rise with exponential rapidity on relatively short time scales, its growth will ultimately and inevitably be saturated on long time scales by various factors which are nonlinear in character. We have mathematically demonstrated the likely occurrence of this feature under various possible circumstances, including the Red Ocean and the Blue Ocean. Finally and most importantly, our arguments and their associated mathematical modelling have received remarkable support from the growth pattern indicated by empirical data gathered from a well-recognized global company like IBM.

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arXiv2007

Innovation Success and Structural Change: An Abstract Agent Based Study

A model is developed to study the effectiveness of innovation and its impact on structure creation and structure change on agent-based societies. The abstract model that is developed is easily adapted to any particular field. In any interacting environment, the agents receive something from the environment (the other agents) in exchange for their effort and pay the environment a certain amount of value for the fulfilling of their needs or for the very price of existence in that environment. This is coded by two bit strings and the dynamics of the exchange is based on the matching of these strings to those of the other agents. Innovation is related to the adaptation by the agents of their bit strings to improve some utility function.

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arXiv2007

A Brief History of Economics: An Outsider's Account

A dangerously brief history of the developments of the main ideas in economics, as observed by a physicist, is given. This was published in 'Econophysics of Stock and Other Markets', Eds. A. Chatterjee, B. K. Chakrabarti, New Economic Windows Series, Springer, Milan, 2006, pp~219-224.

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arXiv2007

Agent Simulation of Chain Bankruptcy

We have conducted an agent-based simulation of chain bankruptcy. The propagation of credit risk on a network, i.e., chain bankruptcy, is the key to nderstanding largesized bankruptcies. In our model, decrease of revenue by the loss of accounts payable is modeled by an interaction term, and bankruptcy is defined as a capital deficit. Model parameters were estimated using financial data for 1,077 listed Japanese firms. Simulations of chain bankruptcy on the real transaction network consisting of those 1,077 firms were made with the estimated model parameters. Given an initial bankrupt firm, a list of chain bankrupt firms was obtained. This model can be used to detect high-risk links in a transaction network, for the management of chain bankruptcy.

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