Re: [Fis] informational economics?, msg from Igor M.
and irrational expectations (that housing prices
> will
> keep increasing, that Ninja's will be repaying debt, etc..) were at
> the
> basis of the crash. The "informational layers" - the so called
> "structured products" or derivatives that increased the complexity of
> international financial system on one side, and blurred its
> transparency
> with respect with fundamentals on the other, were basically fraudulent
> and had no functional linkage to the real sector, except to help clear
> the stocks of unsold houses. But this surely was not the most
> "efficient" way to do it ...
>
> The point is that (all) markets must be increasingly regulated as the
> global economic system becomes spontaneously more complex.
> Self-organized, informational networks (financial or whatewer) do not
> suffice to serve the need for economic and social stability of modern
> societies. Therefore, the tax-payers money must occasionally be used
> to
> cover damages that arise from inherent malfunctions of the market
> informational networks ...
>
> The best
> Igor
>
> Dr. Igor Matutinovic
> Managing Director
>
> GfK-Center for Market Research
> Draskoviceva 54
> 100 00 Zagreb, Croatia
> Tel: 385 1 48 96 222, 4921 222
> Fax: 385 1 49 21 223
> www.gfk.hr
>
> Before printing this e-mail, please consider environment protection.
>
> -Original Message-
> From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]
> ]
> On Behalf Of Pedro C. Marijuan
> Sent: Wednesday, October 29, 2008 12:58 PM
> To: fis
> Subject: [Fis] informational economics?
>
> Dear FIS colleagues,
>
> Some aspects of the current financial crisis might be related to
> discussions we had in this list on information and the nature of
> economic flows years ago ("economic networks", and also, central
> aspects
> of ecological "ascendancy").
>
> The amazing growth of financial assets of many kinds during last
> decade
> may have conduced finally to a brutal crisis like the current one, not
> just for "greed" or political lack of control, but also for dearth of
> scientific understanding. I would argue that:
>
> 1. Financial flows are "anticipatory" information flows that preclude
> the structural changes and the evolution to follow by real economic
> structures.
>
> 2. Without financial anticipation, economic changes could not keep
> pace
> with technology & science progress due to the "viscosity" of social
> and
> legal webs of relationships.
>
> 3. The creation of successive informational (financial) layers becomes
> an exercise in complexity accumulation, that almost inexorably leads
> to
> cross instability thresholds and a general loss resilience.
>
> 4. Though the financial info is a sort of virtual builder, a potential
> energy of sorts, it has to suffer "closure" upon the real economy;
> then
> its excessive flows in out from some sector (eg, housing in some
> strategic countries), amplified in the global complexity, have now
> potential to destabilize the whole financial layers and bring the real
> economy to havoc.
>
> 5. Economy is an informational systems, in crucial aspects, not well
> explained yet... advancing an "info economics" would be quite timely.
>
> Would it be interesting to argue on some of these very roughly penned
> aspects (while our pockets get emptier and emptier)?
>
> best
>
> Pedro
>
> PS. The recent track on foundations of art is still worth of some
> further comment...
>
>
> Pedro C. Marijuán
> Grupo de Bioinformación
> Instituto Aragonés de Ciencias de la Salud Avda. Gómez Laguna, 25,
> Pl. 11ª
> 50.009 Zaragoza. España
> Telf.: 34 976 71 3526 Fax: 34 976 71 5554 [EMAIL PROTECTED]
>
>
>
> ___
> fis mailing list
> fis@listas.unizar.es
> https://webmail.unizar.es/cgi-bin/mailman/listinfo/fis
>
>
> ___
> fis mailing list
> fis@listas.unizar.es
> https://webmail.unizar.es/cgi-bin/mailman/listinfo/fis
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Re: [Fis] informational economics? msg STan S.
msg from Stan Salthe -- Pedro -- >Dear John and colleagues, > >Thanks a lot for adding deep thought to my comments. I quite agree with >your orientations and would make only a few further remarks. > >1. Going beyond the equilibrium approaches of neoclassical economics is >fundamental. I would bring here the points developed by the Santa Fe >group of economists and physicists last decade (Brian Arthur and >others): dispersed interactive agents, no global controller, cross level >hierarchical organization, continual adaptation, perpetual novelty, and >out of equilibrium dynamics. Overall, they talked on the economy as >another instance of "adaptive nonlinear networks". But my personal >impression is that these very theoretical views were in themselves >inspirational for promoting further deregulation of financial markets >(Stu Kauffman and others were quite close to Al Gore and the Whitehouse >circles). The invisible hand of selforganization! A MOST interesting observation! I think the flaw in that program (if it was one) is that when a system self-organizes it may do so in ways that are not congenial to agents that exist at a lower scale within that system (here -- people). > >2. Perhaps more foundational aspects have to be revised: value itself, >plus the way transactions are produced (Lanham 2006 has posited a very >bold view: we would trade informational "motives"...). A new theory on >price formation could be more or less envisioned. But I would be more >staunch on following the inspiration of biological schemes of >organization to put into place "anticipatory dynamics" (not to be >understood necessarily under dynamic systems theory). ATP energy >currency plus the system of second messengers contain very curious >systemic thresholds which the living cell has never crossed. Here I detect in the background the view that hierarchies will be in some way self-similar. This may be the case for some aspects of a scale / compositional hierarchy (I don't know of any demonstrations of that yet), but it's not likely for the specification / subsumptive hierarchy. There are regularities across levels in both cases (transitive relations), but quantitative one's are not known. Since the subsumptive hierarchy is founded on set theoretic format, the question could be addressed there. Are sets theoretically in any way self-similar quantitatively? For the compositional hierarchy, are there quantitative aspects that could be self similar? STAN > >3. If the following figures (just from my memory) are correct, financial >anticipatory flows have grown dramatically in last two decades, from >around 4 times the GDP (80's), to 10 times (90's), and close to 20 in >last years. Unknown thresholds have been trespassed, and the capability >to destructively amplify any serious fluctuation from real economy is >daunting. The Energy crisis, plus the housing crisis, plus the mass of >faulty credits in circulation have put on the knees both the real >economy and the whole financial anticipatory wrappings. The inevitable >closure of the financial on the real, and vice versa, means that the >social "viscosity" of the system --our very lives-- will be put on a >very tough stance. Is this but an anticipation of the even bigger global >sustainability crisis? > >best regards > >Pedro > > > > >___ >fis mailing list >fis@listas.unizar.es >https://webmail.unizar.es/cgi-bin/mailman/listinfo/fis ___ fis mailing list fis@listas.unizar.es https://webmail.unizar.es/cgi-bin/mailman/listinfo/fis
Re: [Fis] informational economics?, msg from Igor M.
rinting this e-mail, please consider environment protection.
-Original Message-----
From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]
On Behalf Of Pedro C. Marijuan
Sent: Wednesday, October 29, 2008 12:58 PM
To: fis
Subject: [Fis] informational economics?
Dear FIS colleagues,
Some aspects of the current financial crisis might be related to
discussions we had in this list on information and the nature of
economic flows years ago ("economic networks", and also, central aspects
of ecological "ascendancy").
The amazing growth of financial assets of many kinds during last decade
may have conduced finally to a brutal crisis like the current one, not
just for "greed" or political lack of control, but also for dearth of
scientific understanding. I would argue that:
1. Financial flows are "anticipatory" information flows that preclude
the structural changes and the evolution to follow by real economic
structures.
2. Without financial anticipation, economic changes could not keep pace
with technology & science progress due to the "viscosity" of social and
legal webs of relationships.
3. The creation of successive informational (financial) layers becomes
an exercise in complexity accumulation, that almost inexorably leads to
cross instability thresholds and a general loss resilience.
4. Though the financial info is a sort of virtual builder, a potential
energy of sorts, it has to suffer "closure" upon the real economy; then
its excessive flows in out from some sector (eg, housing in some
strategic countries), amplified in the global complexity, have now
potential to destabilize the whole financial layers and bring the real
economy to havoc.
5. Economy is an informational systems, in crucial aspects, not well
explained yet... advancing an "info economics" would be quite timely.
Would it be interesting to argue on some of these very roughly penned
aspects (while our pockets get emptier and emptier)?
best
Pedro
PS. The recent track on foundations of art is still worth of some
further comment...
Pedro C. Marijuán
Grupo de Bioinformación
Instituto Aragonés de Ciencias de la Salud Avda. Gómez Laguna, 25, Pl. 11ª
50.009 Zaragoza. España
Telf.: 34 976 71 3526 Fax: 34 976 71 5554 [EMAIL PROTECTED]
___
fis mailing list
fis@listas.unizar.es
https://webmail.unizar.es/cgi-bin/mailman/listinfo/fis
___
fis mailing list
fis@listas.unizar.es
https://webmail.unizar.es/cgi-bin/mailman/listinfo/fis
Re: [Fis] informational economics?
Dear Pedro,
Thank you an interesting topic for the discussion. The study of the
Informational layer of economics is
extremely important for right understanding of the situation at the financial
market. I would like to point to
the following informational layer – namely, the role of expectations of traders
of the financial market. Is it possible to create models of such expectations
and their role in dynamics of assets? I think that G.
Soros was one of the first who discussed this problem in detail in his book
“Alchemy of Finances.” He pointed to independence of dynamics of expectations
from the situation in “real economics”. Free will of traders plays a crucial
role. Soros proposed to describe free will by the apparatus of QM, in some way
to explore the analogy electron-trader.
This idea was realized by my graduate student, Olga Choustova, see
http://arxiv.org/abs/quant-ph/0109122 see also
Choustova, O.A. (2006). Quantum bohmian model for financial market. Physica A
374, 304--314.
who used so called Bohmian model of QM, an analogue of the pilot wave which
guides a quantum particles was used to describe dynamics of expectations. Real
economics was incorporated in the model through a potential function in
financial Schrodinger’s equation.
As in physical QM, the financial pilot wave can exhibit a complicated behavior
even for zero potential, i.e., zero impact from the real economics. Moreover,
the model is nonlocal.
It is too early to say how much one can proceed in such a framework. However,
it is clear that the informational component plays an important role in modern
economics.
Andrei Khrennikov, professor of applied mathematics,
director of International center for mathematical modeling in physics,
engineering and cognitive science, University of Vaxjo,
Sweden
- Original Message -
From: "Pedro C. Marijuan" <[EMAIL PROTECTED]>
Date: Wednesday, October 29, 2008 15:00
Subject: [Fis] informational economics?
To: fis
> Dear FIS colleagues,
>
> Some aspects of the current financial crisis might be related to
> discussions we had in this list on information and the nature of
> economic flows years ago ("economic networks", and also, central
> aspects
> of ecological "ascendancy").
>
> The amazing growth of financial assets of many kinds during last
> decade
> may have conduced finally to a brutal crisis like the current
> one, not
> just for "greed" or political lack of control, but also for
> dearth of
> scientific understanding. I would argue that:
>
> 1. Financial flows are "anticipatory" information flows that
> preclude
> the structural changes and the evolution to follow by real
> economic
> structures.
>
> 2. Without financial anticipation, economic changes could not
> keep pace
> with technology & science progress due to the "viscosity" of
> social and
> legal webs of relationships.
>
> 3. The creation of successive informational (financial) layers
> becomes
> an exercise in complexity accumulation, that almost inexorably
> leads to
> cross instability thresholds and a general loss resilience.
>
> 4. Though the financial info is a sort of virtual builder, a
> potential
> energy of sorts, it has to suffer "closure" upon the real
> economy; then
> its excessive flows in out from some sector (eg, housing in some
> strategic countries), amplified in the global complexity, have
> now
> potential to destabilize the whole financial layers and bring
> the real
> economy to havoc.
>
> 5. Economy is an informational systems, in crucial aspects, not
> well
> explained yet... advancing an "info economics" would be quite timely.
>
> Would it be interesting to argue on some of these very roughly
> penned
> aspects (while our pockets get emptier and emptier)?
>
> best
>
> Pedro
>
> PS. The recent track on foundations of art is still worth of
> some
> further comment...
>
>
> Pedro C. Marijuán
> Grupo de Bioinformación
> Instituto Aragonés de Ciencias de la Salud
> Avda. Gómez Laguna, 25, Pl. 11ª
> 50.009 Zaragoza. España
> Telf.: 34 976 71 3526 Fax: 34 976 71 5554
> [EMAIL PROTECTED]
>
>
>
> ___
> fis mailing list
> fis@listas.unizar.es
> https://webmail.unizar.es/cgi-bin/mailman/listinfo/fis
>
___
fis mailing list
fis@listas.unizar.es
https://webmail.unizar.es/cgi-bin/mailman/listinfo/fis
Re: [Fis] informational economics?
Folks, I sent this directly to Steven, but it might be of wider interest. I will add that information change is not included in current models of evolutionary game theory, as constructed by people like Binmore, his protegé Samuelson, and Skyrms. We've been examining these approaches for several years now in our more advanced political philosophy classes. Don Ross asked me specifically if I had any ideas about including information change into economic versions, but so far I just have some nascent ideas. This area is wide open for research, but I doubt I will have the time to attend to it much. Cheers, John At 04:53 PM 2008/10/29, Steven Ericsson-Zenith wrote: Dear Pedro and John, I'm confused. What is "anticipatory information" and what is "imperfect information." Neither concept makes much sense to me. From my point of view the behavior of the players is inevitable and governed solely by their genetic dispositions mitigated by the conventions they embody. Perhaps by "impertfect information" John refers to some failure of communication in the system. Basically, imperfect information is less than the information required to make an informed decision. Neoclassical economics assumes perfect information, or at least that all agents have the same information. More sophisticated versions of neoclassical economics hold that any differences in information will be averaged out by the "collective wisdom of the market", by which agents look for price discrepancies in order to make a profit (or at least to get a better deal). This all takes time and effort (and a ban on insider trading), and is unlikely to be correct. The presupposition is that price differences are indicative of miscalculations of the true value, and that trading with an eye to profit will correct this. Close to equilibrium, this might be true, but even then opacity in things traded will cause problems, and may well lead to disequilibrium, which is likely to make things worse (the amplifying that Pedro mentions). Put another way: Basically, the market sends messages to traders that can indicate a price out of line with value. Trading puts things back in line with value. That is assuming the messages are true. Neoclassical economic theory implies that the messages are true. So we can think of the market as a massive networked information system in which the signs are prices. Ideally (neoclassically) the flow tends to eliminate price differences for a given commodity or other vehicle. This sometimes fails. We need a more sophisticated theory. John Professor John Collier [EMAIL PROTECTED] Philosophy and Ethics, University of KwaZulu-Natal, Durban 4041 South Africa T: +27 (31) 260 3248 / 260 2292 F: +27 (31) 260 3031 http://www.ukzn.ac.za/undphil/collier/index.html ___ fis mailing list fis@listas.unizar.es https://webmail.unizar.es/cgi-bin/mailman/listinfo/fis
Re: [Fis] informational economics?
Dear John and colleagues, Thanks a lot for adding deep thought to my comments. I quite agree with your orientations and would make only a few further remarks. 1. Going beyond the equilibrium approaches of neoclassical economics is fundamental. I would bring here the points developed by the Santa Fe group of economists and physicists last decade (Brian Arthur and others): dispersed interactive agents, no global controller, cross level hierarchical organization, continual adaptation, perpetual novelty, and out of equilibrium dynamics. Overall, they talked on the economy as another instance of "adaptive nonlinear networks". But my personal impression is that these very theoretical views were in themselves inspirational for promoting further deregulation of financial markets (Stu Kauffman and others were quite close to Al Gore and the Whitehouse circles). The invisible hand of selforganization! 2. Perhaps more foundational aspects have to be revised: value itself, plus the way transactions are produced (Lanham 2006 has posited a very bold view: we would trade informational "motives"...). A new theory on price formation could be more or less envisioned. But I would be more staunch on following the inspiration of biological schemes of organization to put into place "anticipatory dynamics" (not to be understood necessarily under dynamic systems theory). ATP energy currency plus the system of second messengers contain very curious systemic thresholds which the living cell has never crossed. 3. If the following figures (just from my memory) are correct, financial anticipatory flows have grown dramatically in last two decades, from around 4 times the GDP (80's), to 10 times (90's), and close to 20 in last years. Unknown thresholds have been trespassed, and the capability to destructively amplify any serious fluctuation from real economy is daunting. The Energy crisis, plus the housing crisis, plus the mass of faulty credits in circulation have put on the knees both the real economy and the whole financial anticipatory wrappings. The inevitable closure of the financial on the real, and vice versa, means that the social "viscosity" of the system --our very lives-- will be put on a very tough stance. Is this but an anticipation of the even bigger global sustainability crisis? best regards Pedro ___ fis mailing list fis@listas.unizar.es https://webmail.unizar.es/cgi-bin/mailman/listinfo/fis
Re: [Fis] informational economics?
Very topical, Pedro. A few remarks, interleaved:
At 01:58 PM 10/29/2008, Pedro C. Marijuan wrote:
>Dear FIS colleagues,
>
>Some aspects of the current financial crisis might be related to
>discussions we had in this list on information and the nature of
>economic flows years ago ("economic networks", and also, central aspects
>of ecological "ascendancy").
>
>The amazing growth of financial assets of many kinds during last decade
>may have conduced finally to a brutal crisis like the current one, not
>just for "greed" or political lack of control, but also for dearth of
>scientific understanding. I would argue that:
>
>1. Financial flows are "anticipatory" information flows that preclude
>the structural changes and the evolution to follow by real economic
>structures.
This seems correct in general, but in the current situation a lot of
the response is reactive.
>2. Without financial anticipation, economic changes could not keep pace
>with technology & science progress due to the "viscosity" of social and
>legal webs of relationships.
I think there is also a regulative role in distributing risk according to
risk tolerance and greed. Futures markets (and other derivatives
like hedges) are a bit like predators, with prey the primary market.
In predator-prey relations, predators can even out booms and busts
in the prey. This is well documented in ecological work (e.g., the
introduction of wolves to islands like Grand Mannan in New Brunswick
and Isle Royale in Lake Superior). However things are not quite so
simple, since predators can increase to much, leading to a drop in
prey and a lagging drop in predators (lynx and rabbits in the Canadian
subarctic are a classic example). Now imagine that the secondary
market becomes much larger than the primary market. Perilous,
I would say, especially if it is unregulated.
>3. The creation of successive informational (financial) layers becomes
>an exercise in complexity accumulation, that almost inexorably leads to
>cross instability thresholds and a general loss resilience.
Right, as above. There is an additional problem with complex derivatives,
though: the information about them is obscure. Neo-classical economics
relies on perfect information. My friend Don Ross has invetigated
neo-classical economics in some depth (some relevant books at
http://mitpress.mit.edu/catalog/author/default.asp?aid=238) across
a number of applications. We discussed applying information theory
with an eye to understanding the role of imperfect information
in evolutionary game theory, but I found that nobody really knows
what economic equilibrium is (Nash equilibria and Pareto optimality
are only a small part of the story). However, if the market is not
ideal, then its evolution is highly path dependent.
This is from a letter I wrote to Don some time ago:
> Dear Don,
>
> I hope this gets to you in time. This is off the top of my head. It isn't
> as organized as I would like it to be.
>
> State Functions and Non-Equlibrium Systems
>
> In traditional physics we deal only with conserved quantities like energy,
> mass, spin, charge and the like. In this case the conservation laws serve
> as the reference for calculations of change. The conservation laws permit
> the use of the Hamiltonian formulation of physics. The fundamental
> quantities are also guaranteed to be state functions. In fact their sum
> over all component systems is an invariant. This also preserves
> reversibility. The basic idea can be extended to other types of systems in
> which all of the fundamental properties are conserved. Although the
> equations of motion are not linear, conservation of fundamental quantities
> permits linear additivity of these quantities, making analysis of state
> changes relatively easy through approximative methods. This is fairly
> straight-forward. You will recall my claim in my Laplace paper that this is
> the model for not only physics, but for most of modern science.
>
> The extension to equilibrium systems is also straight-forward. In this case
> the usual assumption is that the system moves from one equilibrium state to
> another. Examples are classical thermodynamics, classical economics and
> classical population genetics. In this case, however, there are
> nonconserved quantities, such as entropy and work capacity, money supply,
> and adaptation, respectively (the last is explained in my papers on
> increases in fitness). Note that these are all information based functions,
> even if they are not directly related to energy in an obvious way. Since
> these quantities are not conserved, change can induce sources and sinks,
> and the quantities are not linearly additive. The solution to this problem
> is to look at changes as if they occur arbitrarily close to equilibrium,
> making the changes reversible. This fiction requires that the changes occur
> arbitrarily slowly. In real cases this does not occur, of course. The
> fiction, though preserves lin
[Fis] informational economics?
Dear FIS colleagues,
Some aspects of the current financial crisis might be related to
discussions we had in this list on information and the nature of
economic flows years ago ("economic networks", and also, central aspects
of ecological "ascendancy").
The amazing growth of financial assets of many kinds during last decade
may have conduced finally to a brutal crisis like the current one, not
just for "greed" or political lack of control, but also for dearth of
scientific understanding. I would argue that:
1. Financial flows are "anticipatory" information flows that preclude
the structural changes and the evolution to follow by real economic
structures.
2. Without financial anticipation, economic changes could not keep pace
with technology & science progress due to the "viscosity" of social and
legal webs of relationships.
3. The creation of successive informational (financial) layers becomes
an exercise in complexity accumulation, that almost inexorably leads to
cross instability thresholds and a general loss resilience.
4. Though the financial info is a sort of virtual builder, a potential
energy of sorts, it has to suffer "closure" upon the real economy; then
its excessive flows in out from some sector (eg, housing in some
strategic countries), amplified in the global complexity, have now
potential to destabilize the whole financial layers and bring the real
economy to havoc.
5. Economy is an informational systems, in crucial aspects, not well
explained yet... advancing an "info economics" would be quite timely.
Would it be interesting to argue on some of these very roughly penned
aspects (while our pockets get emptier and emptier)?
best
Pedro
PS. The recent track on foundations of art is still worth of some
further comment...
Pedro C. Marijuán
Grupo de Bioinformación
Instituto Aragonés de Ciencias de la Salud
Avda. Gómez Laguna, 25, Pl. 11ª
50.009 Zaragoza. España
Telf.: 34 976 71 3526 Fax: 34 976 71 5554
[EMAIL PROTECTED]
___
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fis@listas.unizar.es
https://webmail.unizar.es/cgi-bin/mailman/listinfo/fis
