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July 28 - December 24, 2024
Complex adaptive systems tend to have signature emergent patterns that are common across many types of systems. These patterns help us better understand the workings of those systems. We will look at three such signature patterns: oscillations, punctuated equilibrium, and power laws.
In Lotka and Volterra’s model, there are no exogenous shocks driving the oscillations. The ups and downs emerge from the structure of the system itself rather than from any outside source.
delay between their actions and the response to those actions—just remember chapter 5’s example of your oscillating between scorching and freezing while you try to get the water temperature right in an unfamiliar shower.
experiments versus those in the theoretically rational case, the costs generated by the real humans are on average ten times the perfectly rational costs.
This rule is based on a behavior known in the psychology literature as anchor and adjust.
Their IF THEN rules consequently try to steer them to maintain that normal pattern.
the ultimate source of the oscillations in the Beer Game is not the exogenous shock itself (it just gets things started), but the behavior of the participants and the feedback structure of the system.
the causes of the cycles may ultimately lie in the way in which the inductive rules people use in their decision making interact with the dynamic structure of the economic system.
Certain species are very densely connected to other species in the web of food relationships and niche competition. Biologists call these keystone species.
technologies are inherently modular: a
Power laws, along with oscillations and punctuated equilibrium, are another signature characteristic of complex adaptive systems.
the best buy offer might be $100 and the best sell offer $102; the gap between the best buy and sell offers is known as the bid-ask spread.
The impact of your 1,000 share market order was to drive the asking price from $102 to $107.
large fluctuations occurred when there were large gaps between the price levels in the book.
limit order books in general tend to be quite chunky and sparsely populated.
the structure of the order book on its own was a significant source of volatility.
the limit order book serves as a form of memory, or a storehouse of past news, as the pattern of orders in it may have been influenced by news at the time the orders were placed.
Complex emergent phenomena such as business cycles and stock price movements are likely to have three root causes.
The first is the behavior of the participants in the system.
Second, the institutional structure of the system makes a big difference.
Third and last, are exogenous inputs into the system.
Things that are designed have low entropy. They are far from being random creations.
There are two realms (and only two realms) in which we see design: in biology and in the artifacts created by biological creatures.
Sims then gave his block world a biological twist by endowing each block creature with a form of computer DNA
The substrate can be thought of as the material or information on which the algorithm acts.
Algorithms are formulas for processing information. They are in effect computer programs.7
Evolution is an algorithm that is substrate-neutral.
Evolution is also recursive: its output from one cycle is the input for the next round.
Evolutionary theorists call such a set of possible permutations a design space.
we need is a schema reader. In the biological world, a schema reader is a mechanism that turns DNA into living creatures.
An important feature of biological systems is that the schemata code for the designs of their own schema readers.
Interactors are designs that have been rendered from the space of possible designs and made “real”
the process whereby the Judge applies the fitness function and rates the toys selection.
In evolutionary lingo, this swapping of parts of schema is called crossover.
random errors are mutations.
Complex designs are inherently modular.13 Our
A complex design can be viewed as a hierarchical collection of modules and submodules. In an evolutionary system, each of these systems, subsystems, and component parts has corresponding pieces of code for it in the schema.
Competition for finite resources was a theme of evolution from its very beginnings.
algae, floating in scummy mats on the world’s seas.
factors. As soon as there was a schema, a schema reader, and a fitness function, the logic of the evolutionary algorithm could be established.
important aspects of fitness coevolve with the system. A critical part of an organism’s environment is other organisms.
DNA alphabet contains four letters (C, G, A, and T, representing the four nucleotide bases cytosine, guanine, adenine, and thymine),
rough-correlated characteristic that makes evolution
the ideal algorithm for searching fitness landscapes.
First, we have to imagine that it is a pitch-black, moonless night.
Second, this landscape has a dangerous feature to it.
In order to search the landscape, we might first pick a random starting point and then use the following simple rule:
Like game design
This rule is called an adaptive walk
While the adaptive walk is efficient at climbing individual peaks, it has an important limitation; once you reach the top of a peak, you stop and are stuck on a local maximum.
random jump has the advantage over the adaptive walk of not getting stuck on local maxima—
