Doyne Farmer

Well... I think it's fundamentally endogenous. And it's a challenge to model in economics. In biology, you can just say, well, innovation is randomness. You randomly change a gene. Or, OK, you have to deal with recombination, which is more complicated. But it's just a process you can specify in an algorithm. Because we have this universal biological code that everything follows.

Well... I think it's fundamentally endogenous. And it's a challenge to model in economics. In biology, you can just say, well, innovation is randomness. You randomly change a gene. Or, OK, you have to deal with recombination, which is more complicated. But it's just a process you can specify in an algorithm. Because we have this universal biological code that everything follows.

Whereas we don't have anything that clean in the economy, Innovation depends on human reasoning, but sometimes just assuming it happens randomly is not a bad start. There's something called Wright's Law or learning by doing, comes under several different names. That's a very useful way to predict technological improvement.

Whereas we don't have anything that clean in the economy, Innovation depends on human reasoning, but sometimes just assuming it happens randomly is not a bad start. There's something called Wright's Law or learning by doing, comes under several different names. That's a very useful way to predict technological improvement.

The theory for that actually, ironically, was originally started by John Muth John Muth is a guy who actually invented rational expectations in 1960. But he also, he could work with both hands. He said, let's assume that inventors just throw darts at a dartboard at random. And let's assume they're just smart enough to see when they've made a better throw.

The theory for that actually, ironically, was originally started by John Muth John Muth is a guy who actually invented rational expectations in 1960. But he also, he could work with both hands. He said, let's assume that inventors just throw darts at a dartboard at random. And let's assume they're just smart enough to see when they've made a better throw.

And so he then showed that you got Wright's law, although only with an exponent of one, right? That's the only exponent he could drive. Fast forward, there was another simulation paper. And then we wrote a paper where, again, we enhanced that idea by looking at the fact that technologies are connected within a device.

And so he then showed that you got Wright's law, although only with an exponent of one, right? That's the only exponent he could drive. Fast forward, there was another simulation paper. And then we wrote a paper where, again, we enhanced that idea by looking at the fact that technologies are connected within a device.

If you change the carburation system, you may need to change the ignition system. So you look at what's called a design structure matrix that automobile designers and other designers of complex things use to understand interactions.

If you change the carburation system, you may need to change the ignition system. So you look at what's called a design structure matrix that automobile designers and other designers of complex things use to understand interactions.

So we enhanced the theory to deal with that, derived a bunch of stuff physics style, and we were able to show that, derived the Wright's law exponent, and show that the more complicated and less modular the system is, the lower that exponent is and the slower it improves. And that's been tested. It seems to be more or less true.

So we enhanced the theory to deal with that, derived a bunch of stuff physics style, and we were able to show that, derived the Wright's law exponent, and show that the more complicated and less modular the system is, the lower that exponent is and the slower it improves. And that's been tested. It seems to be more or less true.

It's another example of throwing darts at a dartboard actually is good enough to get you there, as was ironically realized by John Muth, the founder of rational expectations. But somehow economics got locked into a framework where you couldn't do what Muth did anymore. That's just bad cricket. to assume that people just flip coins. Not okay.

It's another example of throwing darts at a dartboard actually is good enough to get you there, as was ironically realized by John Muth, the founder of rational expectations. But somehow economics got locked into a framework where you couldn't do what Muth did anymore. That's just bad cricket. to assume that people just flip coins. Not okay.

Yes. I think the same is true in physics and many other disciplines. Because those guys had to wrestle with coming up with the concepts in the first place. So they understood the slippery ground they were standing on better than subsequent generations.

Yes. I think the same is true in physics and many other disciplines. Because those guys had to wrestle with coming up with the concepts in the first place. So they understood the slippery ground they were standing on better than subsequent generations.

I think actually the simulations will help us derive better theories. The theories that get derived, though, are different than that standard template I gave you. Sure. Although sometimes it could be that, if it goes to equilibrium, could work, right?

I think actually the simulations will help us derive better theories. The theories that get derived, though, are different than that standard template I gave you. Sure. Although sometimes it could be that, if it goes to equilibrium, could work, right?

But the theories that we complexity economists use are often more like statistical mechanics or evolutionary biology models, which may or may not have equilibrium in them. And so it's a much more flexible theoretical framework. But I'd like to draw an analogy to fluid flow. The Navier-Stokes equations, you can derive them from Newton's laws. And you can write them down.

But the theories that we complexity economists use are often more like statistical mechanics or evolutionary biology models, which may or may not have equilibrium in them. And so it's a much more flexible theoretical framework. But I'd like to draw an analogy to fluid flow. The Navier-Stokes equations, you can derive them from Newton's laws. And you can write them down.