Chapter 65 Network Reflections on Economics 2
1 Maximization of interests at the individual level is a general tendency, like the assumption of a rational person. The interests of the whole and the interests of the individual may conflict to a certain extent, so a certain organizational mechanism is needed to coordinate and avoid the tragedy www.biquge.info of the commons.
There will be a certain marginal decline in a single-dimensional relationship, but when a certain threshold is exceeded, it can be coupled with other levels to form a new relationship.
What can be like money as a unit of measurement in a network, with liquidity, extraction of eigens, topology of the network, relative proportions of hierarchy.
Generally speaking, we can average a specific object, just as quantifying the cost of time is a certain value, which is no problem at the overall level, but the reality is that it is expressed selectively according to the environment, and the distribution of the network makes it fluctuate to a certain extent, that is, the value of time is not equal. This is a further breakdown that makes sense for a more granular choice of environments. It is essentially a selective expression around intrinsic fluctuations. And analysis shows great power only at the macro statistical level.
The exchange-enhancing utility is achieved in the form of information proliferation, as is the transmission of bacterial resistance genes. According to the fixed point principle, there must be objects that are perfectly matched to a particular thing, but it is difficult for us to find them. So once found, there can be huge benefits. Of course, the interests are relative, and there is always a source, and from the overall point of view, there is only the redistribution of resources. For example, the interests generated by the division of labor are used by others, but from a higher perspective, we will find that our interests are also plundering the outside world. The equilibrium we have reached is nothing more than a form of self-organization, coordinating the internal hierarchy and competing for external resources. There's no such thing as a free lunch.
Utility is a relative thing that is different for different individuals (couplings of selective expression at different levels). This is essentially a relative proportion
2 We all understand the world through relative proportions, that is, to delineate a boundary, and then to understand the whole in terms of the relative proportions of the interior to the boundary. And the proportions may contain high-dimensional structures.
Sequence matching operations are not only about matching, but also about speed, and even direction (the loss is greater than the gain).
The rate of change is related to the distance from the convergence level, which is a high valuation of the individual itself.
Essentially, mathematical expectations, are the nature of an individual's psychological fluctuations.
The distribution structure and the change function (probability and utility) present a similar functional structure, i.e., the normal distribution function.
Small probability, large expected value (lottery) is an enrichment effect that is concentrated in small amounts below people's psychological thresholds, like taxation. It can lead to a certain false expectation.
The chain of suspicion can be carried out indefinitely, but there will be a certain convergence in reality. Therefore, a certain eigenology can be selected to represent the overall trend, which is the principle of fast matching.
3. Differentiation, dependence on the outside world will become stronger and stronger, and at the same time, it will become more and more difficult to replace itself.
The relationship between demand and price is of the first order, and the change of its change is of the second order, and its combined effect is regarded as a convergent series.
Price discrimination is the conversion of a visually visible currency into other forms of cost, with no real discount. But for individuals, as long as their expectations of these costs are less than the benefits of the discount, they can be happy. This is what we understand as consumer surplus. There is a lot of roughness, that is, everyone is different, and the higher the degree of matching, the higher the benefits created, but this has a cost, and eventually a certain equilibrium will be reached. Reference fractal structure, limited area, length
4 Price is the result of selective expressions at the levels of value, utility, scarcity, cost, and so on. Finally, due to the existence of competition, a certain equilibrium is reached.
There are often seemingly inverted cases of cause and effect in economic societies, which shows that there is no cause and effect in a complex network, only connections.
Multi-level coupling allows the network to form a whole, and the flow of information is relatively fast. Just as capital is sensitive to potential differences, there will soon be the flow of capital, a high-dimensional structure of the economy and society, to eliminate potential differences. What quantities in the network structure can be extracted like currency?
Utility is a selective expression of value and is a high-dimensional structure.
The selective expression of the elements of production, such as land, labor, and capital, is the existence of entrepreneurs. It's an emergence.
Economies of scale are equilibrium states with a margin of zero, which is a description of the whole. Of course, this is relative, and the producers (except for subsidies) are basically greater than 0. The benefit to new merchants may be less than 0.
A margin of 0 is a high-dimensional structure, when the enterprise is the largest. Marginal quantities are a great tool for us to understand the future. It is like the second derivative of acceleration a, and finding the first derivative is like a fractal, which can be efficient, but its range of use will become narrower and narrower. Refer to the acceleration of high-speed rail.
We can accept a large range of small probabilities, and we cannot accept a small range of high probabilities, even if they are equal according to their expectations. That's because we have a mechanism to ignore: below the threshold, you don't notice. So it is possible to silently collect these small interests in a small enough range, which creates a potential difference.
5. The connection of different objects: due to the existence of distribution, there may be extremely unrelated objects showing a certain high probability of connection. This is just the result of the probability collapse of the path, which is an accident. If we deduce the cause backwards from the effect, we will soon converge or become chaotic. Because in essence, this is a selective expression of the network, which is a combination of multiple factors. While not necessarily noticed, it is indispensable. So I have a problem with the formulation of the butterfly effect.
The existence of reserves allows the network to quickly navigate through various transition periods.
The invisible hand is a manifestation of the high-dimensional structural adjustment mechanism of the network.
Dependence is an interaction that exerts marginal benefits (the relative utility of the same good to producers and consumers is different, and there is a potential difference, which is the power of the network).
Price is a manifestation of an equilibrium state that can change dynamically. The price changes of many things can form a certain trend and guide the various activities of the network. Finally, the result of resource allocation is achieved.
A network structure is a computational structure that is always computing: the equilibrium of the part is achieved and the influence spreads to the whole. Therefore, at the overall level, the formation of certain patterns can be observed, such as the profit-seeking of money is very fast.
The fixed point principle makes the network necessarily have a solution, but the problem is that the solution may not be found.
The achievement of equilibrium is a trend that can lead to the existence of theoretical homogeneity, but the reality is based on the selective expression of this, which presents a distribution trend as a whole.
In a large enough scenario, as long as there are enough attempts, even individuals with limited information can reach an equilibrium in the end. It's a learning mechanism. This is a kind of convergence, which is the inevitable result of the network structure. The formation of this mechanism is related to returns, which is a trend that can eventually form a certain distribution. As in the stock market, efficiency is positively correlated with the degree of information disclosure. And this can be like the formation of e, the smaller the granularity, the higher the benefit, and finally converge to e.
Bubbles are a kind of equilibrium, but the distribution of this equilibrium is small. Compared to normal. This distribution at the overall level is absolute, but individuals may be different, and there will be a certain differentiation, such as old birds and rookies. This is a fluctuation, but it will converge to equilibrium, which can be understood as a certain expectation.
Price changes are high-dimensional, and we cannot understand the emergence of inflection points, which are caused by the power-law distribution and explosion of the network.
The distribution of the network allows high-throughput central nodes to make rapid changes and then exit quickly, with regular nodes (often even less at their speeds) taking over. Refer to the smart people of the stock market.
Price is the essence of the network, delivering the maximum amount of information.
Equilibrium converges rapidly, and this speed, as a high-dimensional structure, also needs to be maintained at a certain level. It's not good to be too fast (bubble) or too slow (information lag), but because of the distribution, we know it's bound to happen. What we can do is move in the position of this distribution function. But as long as there are enough people who think this way, the overall distribution function can be changed. We see it as an evolution.
6 Paranoia, an extreme differentiation, high risk and high return, is irreplaceable as long as it becomes part of an underlying structure.
The cost-benefit analysis is a basic operation of the game, which is a first-order operation that materializes the macroscopic equilibrium into a specific object. Due to the coupling of levels, it is impossible to reach a stable equilibrium in the final result, but a relatively large value can be obtained based on experience.
Opportunity cost is an implicit structure whose selective expression results in what we can understand as a general cost.
The scarcity of resources necessitates us to make a certain choice, which is seen as a kind of convergence. But the relativity of the network allows the overall benefit to be maximized, i.e., individuals have different preferences for the same things.
The enterprise is a model of the market network, a kind of central node, and an emergent nature.
The development of a network of variation is innovation, allowing the formation of various levels of combinations, and screening according to their adaptability to the environment (improvement in efficiency), and the remaining individuals have a greater probability of being meaningful mutants. This creates a potential difference, and then the balance of the network shifts and the resources are skewed so that its margin is zero. Essentially, it is a resistance to convergence, i.e., diminishing returns.
Innovation is a change in proportion, just like the eagle and pigeon game, choosing a few factions can have higher returns. Doing the opposite, it is a proportional change in the hierarchy, which may create new benefits. Outbreak of reference networks.
7. The network structure is multi-level coupling, so under the premise that the situation of the general environment remains unchanged, there is always a certain small probability of resistance to change, which is the coupling of the network.
Comparative advantage, which is a relative nature, is essentially the result of the differentiation of the network. The equilibrium achieved by their coupling is a win-win. It's the power of integration. Converting the relative convergence (mass production) into its background information by moving it can yield benefits above the marginal value.
Reality is the convergence of theories, so it is not possible to reach the optimal solution, but often the suboptimal or even inferior solution. But the transfer of these interests is inevitable, that is, there is a local optimal solution.
The equivalence of probabilities, any observable change is based on the accumulation of more unobserved changes.
The maintenance of the contradictory state can make the network adapt to environmental changes.
Don't try to salvage outdated changes, as the costs outweigh the benefits. The right attitude is to adapt.
8. Maintaining a coupling structure with multiple possible states can maximize adaptability to environmental changes.
Perfect competition is an ideal state to be able to have the greatest possible combination and efficiency. The network is bound to carry out a certain distribution differentiation on this basis, and one of the manifestations of the economy and society is the monopoly, which conforms to the power-law distribution. Essentially, it is a change of resistance to entropy increase. Competition itself means uncertainty, and the individual of the network hopes to have a more certain relationship, which is the formation of a competitive relationship, and finally a certain equilibrium can be formed.
There is inertia in the achievement of equilibrium, and any change is an expression of the network, and it takes a lot of money to change. Just like a chemical reaction, the free energy needs to be elevated in order to proceed.
Competition is the discovery of new combinations, with both a small probability of innovation and a high probability of destruction. Promote the development of the overall network.
The secondary effect is a stabilizer in which the intrinsic nature of the whole is determined by the primary effect. Therefore, the network has always been the result of various layers of coupling. However, secondary effects also need to be corrected for secondary effects to remain stable. For example, violations of law and discipline are natural, but there are no clear laws and regulations, and even regular activities cannot be carried out. The existence of secondary causes the balance of the network to be maintained at a certain level.
Networks tend to be selective expressions of the basic level, i.e., in the form of coupling. For example, the market is imperfect competition that combines competition and monopoly. Such as oligopoly and competitive monopoly these intermediate states. This is the natural distribution of the network.
Competition brings efficiency, monopoly brings benefits, this is the competition between different levels, and the final equilibrium is a combination of the two. However, this is a description of the network as a whole, and there may be resistance changes locally, that is, relatively pure competition or monopoly.
The level of free competition is equilibrium, but the reality is uneven, so there may be a variety of adjustment mechanisms.
The detachment of any institution is not recognized, and then the models are based on certain interactions, such as the rational man assumption of economics.
9. There is no difference between the different levels of the network at the overall level, only different distributions. Of course, there are still local strong and weak relationships. This is the relationship between business and consumer. But if there is no intervention, the overall balance will shift to the corporate side.
The multi-level coupling of the network allows any change to reach a new equilibrium state in different equilibrium moves. This is how resources are allocated.
If the effects of the network's multi-level coupling are not taken into account, any interference may deviate from its original purpose. A collection of multiple levels of effects may lead to new variations.
As the visible interests increase, there must be a decrease in the invisible interests, which is conserved within a certain range of time and space.
The change in criteria causes the equilibrium to move, from one Nash equilibrium to another, but the proportion of the cost remains the same.
10 A successful mutation is often built on the failure of countless mutations. This is an inevitable consequence of adaptation to the environment.
The optimal range is the result of the selective expression of multi-level coupled networks, which makes distribution differentiation inevitable. The best is the most adaptable, not a change in a single dimension.
Cost-benefit analysis is the basis of all changes, and the achievement of this equilibrium is a complex process due to the differentiation of the network, but this is the general trend, and the overall trend is irresistible.
The reduction of costs can bring about an increase in the speed of commodity operation, all of which makes the economic and social system have a stronger ability to grab various resources, which is to harm the environment and make up for our society. And the cost cannot be reduced to zero, just like the friction in reality. Then the component of the network corresponding to the overall trend of gravity is the absolute energy distribution.
Networks are imperfect and require the regulation of a variety of external mechanisms. The network structure that emerged as a resistance to the entropy increase trend will eventually collapse without external resources. Therefore, the rapid development of society is an irresistible wheel, and it grows like an avalanche in proportion to growth. If some links do not keep up, there will be a state of chaos until the society reaches a new equilibrium according to the specific environment. Refer to the economic crisis.
The analysis of the network is the continuous decomposition of the hierarchy and the coupling relationship formed by the sequence of its composition. That is, the binary analysis of producers and consumers in economics should go deep into the organizational relations at different levels.
The differentiation of the power-law distribution of the network corresponds to the formation of the enterprise. It is a convergence of costs resulting from highly differentiated tissues.
The sub-structure of enterprise market network differentiation has the nature of differentiation, that is, different levels of the network have similarities. Integration between this level of the enterprise is cost-related.
The firm is a selective expression of the market, and its boundaries are relatively determined, which we see as a topological change. And cost is a key factor in maintaining the probability of its existence at scale. That is, when the marginal return is 0, a certain stable state is reached. That's the boundary.
The division of labor is the differentiation of the network, and there is a certain comparative advantage in the first-order guidance, so the division of labor between individuals tends to be differentiated. And the division of labor is based on a certain exchange, which has a cost, which is reflected in the reduction of the second derivative. The game of the level of cost and benefit makes equilibrium reached, so that the exchange is a finite convergence point. This is to understand the process in the form of a Taylor series. The boundary is the state corresponding to the marginal return of 0.
11 Using the Kuhn-Tucker theorem, some non-optimal possible solutions are excluded, so that the range of optimal solutions is greatly reduced. This is the path collapse of the network, which is the connection of the extreme value formed by the dimensionality reduction of the high-dimensional structure, which is a sequence combination of probabilities, and the specific path is the result of selective expression, that is, the formation of a certain game equilibrium.
Information asymmetry creates a potential difference, which can bring a certain amount of energy release in the process of information movement.
Information is a cost, and when this cost cannot be sustainably reduced, it will bring about an imbalance in the coupling relationship at the overall level, and eventually collapse. The expulsion of good money by bad money is an inevitable consequence of the convergence of the trend reached in the Nash equilibrium.
Information asymmetry is an inevitable relationship caused by the differentiation of relatively independent levels. Therefore, it is necessary to couple with other levels to form a more stable network structure (such as incentives and pressures), where information asymmetry still exists, but has little impact on the overall interests.
12 Economics is a discipline of choice, and the achievement of games and equilibrium can provide a predictive property at the overall level: there is a high probability of equilibrium occurring, but there is also a small probability of other events occurring, due to the introduction of new relations.
The different states of Nash equilibrium have a certain probability distribution, and theoretically the choice with a small probability can maximize the interests of both sides of the game, but at this time, there is a relatively independent level of the game formed by the two sides of the game and the external environment (multi-level coupling caused by the self-similar structure of the network), and the equilibrium at this time is the result of a higher dimension.
To a certain extent, it can be understood that the overall network structure is expanded as a Taylor series, and the game we generally understand is the analysis of the terms of its characteristics, such as the game of coefficients and powers. But in the end we need to consider the overall situation, which is a sequence that ultimately converges, so it's a conservation. However, individuals can compete for relative positions, which is related to the distribution of the network.
The game is multi-layered, and we can't consider all the factors, but as long as it is possible to have an impact, it may have an impact on the outcome of the game.
Formulating a certain mechanism to make the equilibrium state of the game is the result we want, and it is necessary to combine the pursuit of interests at different levels and eliminate information asymmetry.
The transmission of information may form a certain loop, resulting in positive or negative feedback mechanisms. As long as the number of occurrences is large enough, we are confident that this will happen.
13 The establishment of property rights in economics is a new resource for discovering the subjective agency of individuals. And it can block the progress of the positive feedback mechanism, i.e., convergence.
The tragedy of the commons is a positive feedback mechanism naturally formed by the network, which we generally understand as a vicious circle. But in fact this is the result of the distribution of a network, which is not good or bad, only in the expression of the determined environment. This is in fact the mechanism of today's society.
Competition of morality and interests is also universal, and there is no distinction between high and low.
The prisoner's dilemma is a game of short-term interests and long-term interests, and in general, the trend of convergence makes individuals choose the local optimum, and if there is a more certain relationship like the coupling of the external mechanism of property rights, the balance of the game can move in the direction of long-term interests.
14 Internalization of externalities, which is a quantification of the level of convergence, helps to clarify rights and responsibilities, and can achieve an equilibrium of the overall optimum, which is generally low probability.
The Pigou tax is a first-order relationship, which simply and rudely taxes A or stops A's behavior when A harms B's interests. However, the structure of the real network is complex, and it is regarded as a kind of dynamic equilibrium, and the first-order adjustment is not enough, and the overall direction will still be in a fluctuating and unstable state, that is, it is prone to overcorrection. This requires multiple levels of adjustment to stabilize the balance within a certain range, like the convergence of the Taylor series.
The solution of this dynamic interrelationship requires the introduction of other variables so that the equilibrium reached by the game is optimal for the whole. Coase's approach is to clarify property rights, so that the two parties engage in an intrinsic game before engaging in their activities, and the measurement of the cost of benefits contributes to the optimal behavior of their performance at the overall level. Whoever gets the property rights, the result is equivalent. The right to have damage and the right not to be harmed are symmetrical. Of course this is the case of the theory, i.e. the cost is 0. And the reality is naturally not zero like friction. Therefore, in reality, the Pigou tax still has a certain value, and it is an intrinsic feature of the network formed by various costs.
This is to determine the overall equilibrium, i.e., the equilibrium constant of this reversible reaction is certain. No matter how many times this game continues, it will always converge to an equilibrium state.
15 The system is an internalized structure of externalities. It is responsible for the interests of the whole, so the infringement of individual interests is inevitable, because this is the result of the game between individual interests and overall interests: in most cases, the interests of the whole respect the small interests of the individuals, and in a few cases, the interests of the individuals give way to the interests of the whole. This is a coupling structure.
Essentially, it is a certain pattern formed based on an infinite free market network, which is an emergence. The result of this distribution can in turn maintain a certain degree of freedom in the market network. The two complement each other and are the basic components of the high-dimensional structure of the network.
For the network, first-order logic is not enough, a collection of higher-order logic is required, which can be expressed as the convergence of the Taylor series, and according to the previously mentioned Coase's theorem, we need to determine the boundary of this state. The system is to divide this boundary, and it is to make an overall depiction of the costs of each level, which I regard as the eigenvalue solution of the matrix.
The patent system is actually a constraint on the diffusion of favorable mutations in social networks, and specific inventions have certain advantages, forming a certain potential difference with other levels of the network, so that information can be moved. At the first level, there should be no patent system. In the long run, only this explicit definition of interests (e.g., the determination of property rights) can make society as a whole inclined to invent. This is a competitive game at different levels of the network. The final manifestation is a certain distribution. In these levels of reciprocating games, the whole will converge to a specific level due to the existence of cost, i.e., wear and tear. This is the result of probability, which allows for maximum adaptation to the current environment.
Any interest is mutual in the network structure and is reflected at different levels. If we want to achieve a certain overall optimal equilibrium, we must face the situation in which the interests of specific individuals are damaged. There is no perfect system to reconcile these interests, as resources are inherently limited.
This essentially reflects the process of distribution and differentiation of the network, the higher the level of evolution, the more complex the overall structure, and the high dependence on each other. It has a relatively high stability to changes in the environment, and correspondingly, it is more difficult to rebuild once destroyed. But this is the inevitable development process of the network, and the distribution is differentiated.
Path dependence, the inertia of network development. This is a self-reinforcing positive feedback mechanism, and it is also a kind of distributional differentiation at a larger level (less positive feedback and more negative feedback).
16 The malice of the whole, in the game, there will be behaviors that tend to the interests of the whole, which is the structure of the distribution of the network (Matthew effect), that is, divided into specific levels, like the competitive game of the different levels of the nervous system of the human body. The benefits of any measure must take into account the proportional relationship between its specific levels, because this is a result that is convergent, non-generalizable, and requires a fine combination of relationships to achieve. It's like a synthetic fallacy. The relationship between the individual and the whole is a dynamic game, and for the individual, the choice to choose the opposite of the choice of the majority of individuals can cause the movement of interests of the individual. This behavior is inevitable due to the presence of distribution. The overall benefit lies in the development in a more certain direction, and this is a low probability, so once it occurs, the benefit must be higher than the overall loss.
This contradiction cannot be resolved, and a certain equilibrium can only be reached to balance the interests of different levels.
The distribution of the benefits of the whole will cause losses to the interests of the whole, because in addition to the fixed interests, there are also liquid interests, that is, interests of hierarchical coupling. This is fair and efficient competition.
The intensity and speed of communication determine the possible combination between the levels, so that various levels can be formed.
Dynamic game is the basis for the formation of a pattern, because dynamic change is a form of combination, and according to the emerging viewpoint, it is possible to form a positive feedback or negative feedback adjustment mechanism, and there is a certain distribution between these mechanisms.
Distribution is the normal structure of the network, but at the same time, various constraints are needed to avoid the polarization of distribution in order to maintain stability. But this will sacrifice the possibility of the overall transition to a new level. To a certain extent, the more extreme the differentiation, the higher the level of jump. Just as human society enters the space age, it needs to sacrifice certain interests in order to be able to concentrate and create miracles. Of course, this could also bring about the collapse of society as a whole. Therefore, the relationship between reality is based on the selective expression of these two, which is reflected in the distribution coupling at all levels.
This kind of multi-level coupling makes us only have different equilibrium at different levels, so that the network as a whole has a certain diversity and forms a relatively stable structure.
Pareto optimality is a global tendency, under the effect of which the overall optimal can be reached, because no matter what the situation, there is always a tendency to reach a Nash equilibrium with the overall optimum.
If it goes to the extreme, the one-sided pursuit of fairness or efficiency will bring about the minimization of the overall benefit, so the coupling of different levels, i.e., selective expression, can enable the network to take into account the interests of different levels to a certain extent.
The proportion of extreme differentiation is a balanced move to the overall network.
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