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

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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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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