Book - The Origin of Wealth

The Origin of Wealth is a bestseller written around the proposal of considering the economic activity as a Complex Adaptive System. To do this Beinkocker first describes the current economic paradigm, showing its limitations, their origin and justification, as well as giving very persuasive arguments on why they are no longer useful in explaining the current situation and its evoultion.

He then jumps into the full description of complex systems with some basic distinguishing ideas of this "complexity economics"

1.-Dynamics: Model describes the economy as a dynamic non-linear system, far from equilibrium in contrast with the traditional model

2.- Agents: Model describes them as individuals making decisions with partial information, subject to errors and biases, and able to learn over time, all this in contrast with the traditional theory.

3.- Networks: Model considers explicit interactions between these individual agents. These Networks also CHANGE over time. The traditional model considers interactions between agents only through established market mechanisms (e.g. auctions)

4.- Emergence: Model makes no distintion between micro and macroeconomics. It searches for behaviours that appear "naturally" in these complex systems. No such alternative considered in the traditional theory.

5.- Evolution: Model considers an evolutionary process of differentiation, selection and amplification, providing the system novelty, and it is a mechanism for attaining order and complexity (flexibility). Traditional theory also considers no such mechanism.

Highly Recommendable.

Product Details
Paperback: 544 pages
Publisher: Harvard Business School Press; 1 edition (September 14, 2007)
Language: English
ISBN-10: 1422121038
ISBN-13: 978-1422121030
Product Dimensions: 9.2 x 6.1 x 1.5 inches

Book - The evolution of Cooperation

The Evolution of Cooperation is a book I heard of back in 1991 when I first read "The selfish Gene" by Richard Dawikins. Dawkins devoted a complete chapter to the description of the particular problem for which this book poses an alternative, and his description was so compelling that it eventually led me to buy it.

The experiment is quite simple and at the same time ingenious. It handles around the problem of cooperation. This is, how is cooperation explained in a darwinian context, where all entities are supposed to be modelled as selfish, without central authority, and looking for their own best outcome? It is evident that cooperation can lead to this, that is all cooperators being best off, but, then how is cooperation evolved and configured?

To model this, Axelrod proposed a "Game" of iterated Prisioner's Dilemma between entities (computer functions) with different strategies, set them off to face each other, asigning points per round won, to see which strategy evolved as winner.

Axelrod, did not himself propose all strategies. Instead, he sent out an invitation to several scientists in the english-speaking world who proposed the strategies.

The book is very detailed in understanding first the empiric evolution of the Winning Strategy, TIT_FOR_TAT (Stategy that would mimic the behaviour of the opposite player in the next round), and then its mathematical derivation.

The four suggestions that spring out from this experiment, and as porposed by Axelrod are:
1.- Don't be envious
2.- Don't be the first to defect (betray)
3.- Reciprocate both Cooperation and Defection
4.- Don't be too clever.

I cannot but wonder at the inmense practical applicability of the rules here derived.

Product Details,
Paperback: 264 pages
Publisher: Basic Books; Revised edition (December 4, 2006)
Language: English
ISBN-10: 0465005640
ISBN-13: 978-0465005642
Product Dimensions: 7.8 x 5.2 x 0.7 inches