Networks
We are studying the structural evolution of topology and density of interconnected networks along with their flows. This work is aimed at understanding basic features which arise in the kinds of multi-layered, interconnected networks which arise in biology, ecology, and economics. Network models loosely describe the kind of cooperative relationships which arise through positive feedback between species or businesses, which can form the building blocks of ecosystems and economies, and may help illuminate the distinction between success and failure in a competitive environment. In network flow models, the concept of robustness barriers will necessarily be more sophisticated than it was in the HOT lattice models. The development of simple network models will also serve as a bridge between the existing HOT framework and more realistic technological network simulators.
Recently, we developed a model economy which captures many features of the real economy. Among these features are supply, demand and its variation with time, competition, innovation due to constantly evolving technology, and overhead costs. One of the phenomena observed in this model economy is recession due to demands that change faster that supply. Other phenomena are the characteristic wealth histories and lifetimes of companies. This is due to initial investment in successful new innovations which gives rise to its birth, and reluctance to change in the presence of newer innovations and changing human demand which eventually gaurantee its death. These mechanisms driving the life cycles for companies were made popular recently in the book "Creative Destruction," by Foster and Kaplan. Some features not included in our model are consumers' and companies ' consuming decision games, i.e., consumers waiting to buy until prices or interest rates drop or a company not hiring new employees until after consumers' buying patterns have been observed for some time. Instead, I assume consumption, employment, and production occur without game or delay, and are based upon the present supply and demand of consumers and companies.
One of our goals is to find relatively simple explanations for why some companies do much better (last longer and produce more wealth) than others. Also, we will try to explain why the economy as a whole and even particular industries almost always outperform the individual companies that constitute them in the long run. In addition, we hope to make quantitative statements about the state of the economy in terms of its optimization for production of wealth but fragility to rapid or frequent changes in human demand.