Simple nonlinear systems and navigating catastrophes
Complex Systems Group, Faculty of Engineering and
Information Technology, The University of Sydney, NSW
Received in final form: 5 April 2013
Published online: 24 June 2013
Tipping points are a common occurrence in complex adaptive systems. In such systems feedback dynamics strongly influence equilibrium points and they are one of the principal concerns of research in this area. Tipping points occur as small changes in system parameters result in disproportionately large changes in the global properties of the system. In order to show how tipping points might be managed we use the Maximum Entropy (MaxEnt) method developed by Jaynes to find the fixed points of an economic system in two different ways. In the first, economic agents optimise their choices based solely on their personal benefits. In the second they optimise the total benefits of the system, taking into account the effects of all agent’s actions. The effect is to move the game from a recently introduced dual localised Lagrangian problem to that of a single global Lagrangian. This leads to two distinctly different but related solutions where localised optimisation provides more flexibility than global optimisation. This added flexibility allows an economic system to be managed by adjusting the relationship between macro parameters, in this sense such manipulations provide for the possibility of “steering” an economy around potential disasters.
Key words: Statistical and Nonlinear Physics
© EDP Sciences, Società Italiana di Fisica and Springer-Verlag, 2013