session 3: pm - unsw business school · 2011-08-03 · session 3: pm social versus other complex...
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Session 3: PM
Social versus Other Complex Adaptive Systems
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Outline
Part I
Increasing returns in the economy
Co-evolution
Ceteris paribus
Part II
Model Verification
Session 3B: July 12 2
Part I: Increasing Returns
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Complex systems
Importance of feedback
e.g. infectious diseases
Form of system adaptation
e.g. peppered moths
“fittest” rules survive and thrive, begetting more
Session 3B: July 12 4
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Positive Feedback
Session 3B: July 12 5
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Positive Feedback in Economics
W. Brian Arthur’s article
Traditional economics emphasizes “decreasing returns”
Equilibrium economics
Session 3B: July 12 6
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Three Mechanisms
Network effects
Increasing returns
Lock-in
Session 3B: July 12 7
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Network Effects
Value of a product increases with the number of people who use it
Session 3B: July 12 8
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Increasing Returns
Small economic shifts or accidents become magnified
Bank runs
Market crashes
Location of firms
Technologies
Session 3B: July 12 9
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Lock In
Markets become “locked in” to a particular product or technical solution
Session 3B: July 12 10
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Lock In
Other examples
Session 3B: July 12 11
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Examples
Already discussed
Session 3B: July 12 12
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
A sample model
Session 3B: July 12 13
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
A sample model
Session 3B: July 12 14
20
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0
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1 2 3 4 5
Fin
al B
etam
ax P
erce
nt
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Other Examples
Session 3B: July 12 15
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Other Examples
Session 3B: July 12 16
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Other Examples
Session 3B: July 12 17
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Implications
Government may play an important role in markets
Initial investment creates positive feedback Network effects
Human capital
World markets “lock in” on your country’s product
Barriers to competitors are high Immense firms, oligopoly
Unequal economic growth and development
Session 3B: July 12 18
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Changes in Economic Theory
New Economic Geography
Paul Krugman
Endogenous Growth Theory
Strategic Trade Theory
Michael Porter
Session 3B: July 12 19
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Increasing Returns
Questions?
Session 3B: July 12 20
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Implications for Business
“Co-evolution”
Firms
Economies
States
Ceteris Paribus
Session 3B: July 12 21
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Co-evolution
Rosenau, the “turbulence” model
Emergence a feature of global economy
Increasingly skilled individuals lead to adaptation and co-evolution
Small micro-level events have large macro-level consequences
Sensitivity to initial conditions
Session 3B: July 12 22
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Co-evolution
Interaction complexity Variables interact
Strategic omplexity Actors’ strategies strategies depend upon others’ strategies
e.g. regulation
Ecological complexity Actors change the environment and, by extension, themselves
Reflexive complexity
Session 3B: July 12 23
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Co-evolution
“The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, e-commerce, advertising, search, social applications, location-based services, unified communications and many other things. Our competitors aren’t taking our market share with devices; they are taking it with an entire ecosystem.”
—Stephen Elop
CEO of Nokia
University of Sydney, 6 July 2011
24
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Ceteris Paribus
“All else being equal”
Methodological assumption
e.g. partial effects in multivariate regression: no collinearity
e.g. Mill’s methods of similarity and difference
Session 3B: July 12 25
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Ceteris Paribus in CASS?
Second interactions
Actors adjust strategies “such that the level of perceived risk will match the level of targeted risk” p. 69
E.g. moral hazard
“everything else cannot be held constant” Jervis, p. 73
Session 3B: July 12 26
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Ceteris Paribus in CASS?
“. . . ‘other things being equal’ can be a treacherous phrase if it encourages us to ignore glaring exceptions.”
James N. Rosenau
“Many damned things simultaneously” (1997)
Session 3B: July 12 27
Elbert Hubbard
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Co-evolution and Modeling
First interactions
Second interactions
Third interactions
Session 3B: July 12 28
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Co-evolution Example
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1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79
Pe
rce
nta
ge C
oo
pe
rati
on
Generation
Memory = 4
Memory = 0
Session 3B: July 12 29
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Co-evolution and Ceteris Paribus
Questions?
Session 3B: July 12 30
5th am Intro
5th pm NetLogo
7th am Theory
7th pm Modeling
12th am Emergence
12th pm Systems
14th am Design
14th pm Experiments
19th am Criticisms
19th pm Validation
21st am Smart Agents
21st pm Networks
26th Applications
28th Presentations
Thursday
Research Design
Verification
Session 3B: July 12 31
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