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Dirk Helbing: How and why our conventional economic thinking causes global crises (discussion paper) - Econophysics Forum

How and why our conventional economic thinking causes global crises (discussion paper)20-02-13

Dik Helbing (ETH Zurich)

I believe it’s no wonder that our world is in trouble. We currently lack the global systems science needed to understand our world, which is now changing more quickly than we can collect the experience required to cope with upcoming problems. We can also not trust our intuition, since the complex systems we have created behave often in surprising, counter-intuitive ways. Frequently, their properties are not determined by their components, but their interactions. Therefore, a strongly coupled world behaves fundamentally different from a weakly coupled world with independent decision-makers. Strong interactions tend to make the system uncontrollable – they create cascading effects and extreme events.

As a consequence of the transition to a more and more strongly coupled world, we need to revisit the underlying assumptions of the currently prevailing economic thinking. In the following, I will discuss 10 widespread assertions, which would work in a perfect economic world with representative agents and uncorrelated decisions, where heterogeneity, decision errors, and time scales do not matter. However, they are apparently not well enough suited to depict the strongly interdependent, diverse, and quickly changing world, we are facing, and this has important implications. Therefore, we need to ‘think out of the box’ and require a paradigm shift towards a new economic thinking characterized by a systemic, interaction-oriented perspective inspired by knowledge about complex, ecological, and social systems. As Albert Einstein noted, long-standing problems are rarely solved within the dominating paradigm. However, a new perspective on old problems may enable new mitigation strategies


1. More networking is good and reduces risks

Many human-made systems and services are based on networking. While some degree of networking is apparently good, too much connectivity may also create systemic risks and pathways for cascading effects. These may cause extreme events and global crises like the current financial crisis.


Moreover, in social dilemma situations (where unfair behavior or cheating creates individual benefits), too much networking creates a breakdown of cooperation and trust, while local or regional interactions may promote cooperation. The transformation of the financial system into a global village, where any agent can interact with any other agent, may actually have been the root cause of our current financial crisis.

Countermeasures: Limit the degree of networking to a healthy amount and/or introduce adaptive decoupling strategies to stop cascading effects and enable graceful degradation (including slow-down mechanisms in crisis situations). Support the evolution and co-existence of several weakly coupled financial systems (to reduce systemic vulnerability, stimulate competition between systems, and create backup solutions). Reduce the complexity of financial products and improve the transparency of financial interdependencies and over-the-counter transactions by creating suitable information platforms.


2. The economy drives towards an equilibrium state

Current economic thinking is based on the assumption that the economic system is in equilibrium or at least tends to develop towards a state of equilibrium. However, today’s world changes faster than many companies and policies can adapt. Therefore, the world economic system is unlikely to be in equilibrium at any point in time. It is rather expected to show a complex non-equilibrium dynamics.

Therefore, a new economic thinking inspired by complex dynamical systems, ecosystems, and social systems would be beneficial. Such a perspective would also have implications for the robustness of economic systems. Overall, beneficial properties seem to be: redundancy, variety, sparseness, decoupling (separated communities, niches), and mutually adjusted time scales (which are required for hierarchical structures to function well).

Countermeasures: Invest into new economic systems thinking. Combine the axiomatic, mathematical approach of economics with a ‘natural science approach’ based on data and experiments. Develop non-equilibrium network models capturing the self-organized dynamics of real economic systems. Pursue an interdisciplinary approach, taking on board complex, ecological and social systems thinking. Develop better concepts for systemic risk assessment, systems design, and integrated risk management.

3. Individuals and companies decide rationally

The ‘homo economicus’ is a widely used paradigm in economics. It is the basis of a large and beautiful body of mathematical proofs on idealized economic systems. However, the paradigm of a strictly optimizing, perfect egoist is a model, which is questioned by theoretical and empirical results.

Theoretically, the paradigm assumes unrealistic information storage and processing capacities (everyone would need to have a full 1:1 representation of the entire world in the own brain and an instant data processing of huge amounts of data, including the anticipation of future decisions of others). Empirically, one finds that people behave in a more cooperative and fair way than the paradigm of the ‘homo economicus’ predicts. In particular, the paradigm neglects the role of errors, emotions, other-regarding preferences, etc. This implies significant deviations of real human behaviors from theoretically predicted ones.

Countermeasure: Use a combination of interactive behavioral experiments, agent-based modeling, data mining and social supercomputing to study (aspects of) real(istic) economic systems

4. Selfish behavior optimizes the systemic performance and benefits everyone

Another pillar of conventional economic thinking is Adam Smith’s principle of the ‘invisible hand’, according to which selfish profit maximization would automatically lead to the best systemic outcome based on self-organization. It is the basis of the ideology of ‘free markets’, according to which regulation would tend to reduce the performance of economic systems.

However, models in evolutionary game theory show that self-organized coordination in markets can easily fail, even when market participants have equal power, symmetrical information etc. Moreover, even if the individually optimal behavior also maximizes system performance and if everybody behaves very close to optimal, this may still create a systemic failure (e.g. when the system optimum is unstable). Therefore, it is highly questionable whether the systemic inefficiencies resulting from individual optimization efforts can always be compensated for by greedy motivations (such as trying to get more than before or more than others).

Countermeasures: Measure the system state in real-time and respond to this information adaptively in a way that promotes coordination and cooperation with the interaction partners. Create an information and communication system supporting collective (self-)awareness of the impact of human actions on our world. Increase opportunities for social, economic and political participation

5. Financial markets are efficient

One implication of Adam Smith’s principle of the ‘invisible hand’ is the efficiency of financial markets, according to which any opportunity to make money with a probability higher than chance would immediately be used, thereby eliminating such opportunities and any related market inefficiencies.


Efficient markets should not create bubbles and crashes, and therefore one would not need contingency plans for financial crises (they could simply not occur). Financial markets would rather be in equilibrium as the conventional Dynamic Stochastic General Equilibrium Models suggest. However, many people believe that bubbles and crashes do occur. The flash crash of May 6, 2010, is a good example of a market irregularity, which has repeatedly occurred in the meantime. Also, many financial traders do not seem to believe in efficient markets, but rather in the existence of opportunities that can be used to make over-proportional profits.

Countermeasures: Develop contingency plans for financial crises. Adjust the financial architecture and identify suitable strategies (such as breaking points) to stop cascading effects in the financial system. Introduce noise into financial markets by random trading transactions to destroy bubbles before they reach a critical size that may have a disastrous systemic impact.

6. More information and financial innovations are good

One common view is that market inefficiencies result from an unequal distribution of power, which partially results from information asymmetries (“knowledge is power”). Therefore, providing more information to everyone should remove the related inefficiencies.

However, too much information creates a cognitive information overload. As a result, people tend to orient at other people’s behaviors and information sources they trust. As a consequence, people do not anymore take independent decisions, which can undermine the ‘wisdom of crowds’ and market efficiency. One example is the large and unhealthy impact that the assessments of a few rating agencies have on the global markets.

It is also believed that financial innovations will make markets more efficient by making markets more complete. However, it has been shown that complete markets are unstable. In fact, leverage effects, ‘naked’ short-selling (of assets one does not own), credit default swaps, high-frequency trading and other financial instruments may have a destabilizing effect on financial markets.

Countermeasures: Identify and pursue decentralized, pluralistic, participatory information platforms, which support the ‘wisdom of crowds’ effect. Test financial instruments (such as derivatives) for systemic impacts (e.g. by suitable experiments and computer simulations) and certify them before they are released, as this is common in other economic sectors (special safety regulations apply, for example, in the electrical, automobile, pharmacy and food sectors).


7. More liquidity is better

Another wide-spread measure to cure economic crises are cheap loans provided by central banks. While this is intended to keep the economy running and to promote investments in the real economy, most of this money seems to go into financial speculation, since business and investment banks are not sufficiently separated.

This can cause bubbles in the financial and real estate markets, where much of these cheap loans are invested. However, the high returns in the resulting ‘bull markets’ are not sustainable, since they depend on the continued availability of cheap loans. Sooner or later, the created bubbles will implode and the financial market will crash (the likelihood of which goes up when the interest rates are increased). This again forces central banks to reduce interest rates to a minimum in order to keep the economy going and promote investments and growth. In other words, too much liquidity is as much of a problem, as is too little.

Countermeasure: Separate investment from business banking and introduce suitable adaptive transaction fees.


8. All agents can be treated as if acting in the same way

The ‘representative agent approach’ is another important concept of conventional economic thinking. Assuming that everyone would behave optimally, as the paradigm of the ‘homo economicus’ predicts, in equivalent situations everybody should behave the same. This allows one to replace the interaction of an economic agent with other agents by interactions with average agents, in particularly if one assumes that everyone has access to the same information and participates in perfect markets.

However, the representative agent model cannot describe cascade effects well. These are not determined by the averagestability, but by the weakest link. The ‘representative agent approach’ also neglects effects of spatial interactions and heterogeneities in the preferences of market participants. When these are considered, the conclusions can be completely different, sometimes even opposite (e.g. there may be an ‘outbreak’ rather than a breakdown of cooperative behavior).

Finally, the representative agent approach does not allow one to understand particular effects of the interaction network structure, which may promote or obstruct cooperativeness, trust, public safety, etc. Neglecting such network effects can lead to a serious underestimation of the importance of ‘social capital’ for the creation of economic value and social well-being.

Countermeasures: Protect economic and social diversity. Allow for the existence of niche markets and for the consideration of justified local advantages. Avoid competition on one single dimension (e.g. economic value generation) and promote multi-criterion incentive systems. Develop better compasses for decision-making than GDP per capita, taking into account environmental, health, and social factors. Make social capital (such as cooperativeness, trust, public safety, …) measurable.


9. Regulation can fix the imperfections of economic systems

When the self-organization of markets does not work perfectly, one often tries to ‘fix the problem’ by regulation. However, complex systems cannot be steered ‘like a bus’, and many control attempts fail. In many cases, the information required to regulate a complex system is not available, and even if one would have a surveillance system that monitors all variables of the system, one would frequently not know what the relevant control parameters are. Besides, suitable regulatory instruments are often lacking.

A more promising way to manage complexity is to facilitate or guide favorable self-organization. This is often possible by modifying the interactions between the system components. It basically requires one to establish targeted real-time information feedbacks, suitable ‘rules of the game’, and sanctioning mechanisms. To stay consistent with the approach of self-organization, sanctioning should as far as possible be done in a decentralized, self-regulatory way (as it is characteristic for social norms or the immune systems).

Countermeasures: Pursue a cybernetic and synergetic approach, promoting favorable self-organization by small changes in the interactions between the system elements, i.e. by fixing suitable ‘rules of the game’ to avoid instabilities and suboptimal systemic states. (Symmetry, fairness, and balance may be such principles.) Introduce a global but decentralized and manipulation-resistant multi-criterion rating system, community-specific reputation system, and pluralistic recommender system encouraging rule-compatible behavior.


10. Moral behavior is always costly

Species that do not strictly optimize their benefits are often assumed to disappear eventually due to the principles of natural selection implied by the theory of evolution. As a consequence, a ‘homo economicus’ should remain, and moral decision-making, which constrains oneself to a subset of available options, would vanish.

This certainly applies, if one forces everybody to interact with everybody else on equal footing, as the concept of perfect, free markets demands. In fact, evolutionary game-theoretical models show that these are conditions under which a ‘tragedy of the commons’ tends to occur, and where cooperation, fairness and trust tend to erode. On the other hand, social systems have found mechanisms to avoid the erosion of social capital. These mechanisms include repeated interactions, reputation effects, community interactions, group competition, sanctioning of improper behavior etc. In particular, decentralized market interactions seem to support fairness.

Countermeasures: Promote value-sensitive designs of monetary systems and information and communication systems. For example, introduce two co-existing, interacting, competitive exchange systems: one for anonymous (trans)actions (as we largely have them today) and one for accountable, traceable (trans)actions (creating ‘social’ money or information). Additionally, introduce suitable transaction costs to create incentives for accountable, responsible (trans)actions and to promote ethical behavior.


Summary

In conclusion, we are now living in a strongly coupled and strongly interdependent world, which poses new challenges. While it is probably unrealistic to go back beyond the level of networking and globalization we have reached, there is a great potential to develop new management approaches for our complex world based on suitable interaction rules and adaptive concepts, using real-time measurements.

It must be underlined that our current financial and economic problems cannot be solved within the current economic mainstream paradigm(s). We need to change our perspective on the financial and economic system and pursue new policies. The following recommendations are made:

Adjust the perspective of our world to the fundamentally changed properties of the globalized, strongly interdependent techno-socio-economic-environmental system we have created and its resulting complex, emergent dynamic system behavior.

Make large-scale investments into new economic thinking, particularly multi-disciplinary research involving knowledge from sociology, ecology, complexity science, and cybernetics.

Support diversity in the system, responsible innovation, and multi-dimensional competition.

Recognize the benefits of local and regional interactions for the creation of social capital such as cooperativeness, fairness, trust, etc.

Require an advance testing of financial instruments and innovations for systemic impacts and restrict destabilizing instruments.

Identify and establish a suitable institutional framework for interactions (suitable ‘rules of the game’) in order to promote a favorable self-organization.

Implement better, value-sensitive incentive systems to foster more responsible action.

Establish a universal, global reputation system to promote fair behavior and allow ethical behavior to survive in a competitive world.

Create new compasses for political decision-making, considering environment, health, social capital, and social well-being.

Develop new tools to facilitate the assessment of likely consequences of our decisions and actions (the ‘social footprint’). These tools may, for example, include:


-a 'Planetary Nervous System' to enable collective awareness of the state of our world and society in real-time,

-a 'Living Earth Simulator' to explore side effects and opportunities of human decisions and actions,

-a 'Global Participatory Platform' to create opportunities for social, economic and political participation,

-exchange systems that support value-oriented interactions.

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The Geography of Happiness: Connecting Twitter sentiment and expression demographics, and objective characteristics of place

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Hideaki Aoyama: on #FuturICT #Japan at #MITmedialab

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Hideaki Aoyama's Presentation at FuturICT Workshop 13/14 Feb at MIT Media Lab

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Peter Dodds: Measuring Happiness and Health #FuturICT workshop #MITMediaLab

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Peter Sheridan Dodd's Presentation at FuturICT Workshop 13/14 Feb at MIT Media Lab

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Nature: Global Multi-Level Analysis of the ‘Scientific Food Web - Amin Mazloumian, Dirk Helbing, Sergi Lozano, Robert P. Light & Katy Börner

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FuturICT: Complexity aided design -A. Carbone, M. Ajmone-Marsan, K. W. Axhausen, M. Batty, M. Masera, E. Rome

FuturICT: Complexity aided design -A. Carbone, M. Ajmone-Marsan, K. W. Axhausen, M. Batty, M. Masera, E. Rome | FuturICT Journal Publications | Scoop.it

A. Carbone, M. Ajmone-Marsan, K. W. Axhausen, M. Batty, M. Masera, E. Rome

“In the next century, planet earth will don an electronic skin. It will use the Internet as a scaffold to support and transmit its sensations. This skin is already being stitched together. It consists of millions of embedded electronic measuring devices: thermostats, pressure gauges, pollution detectors, cameras, microphones, glucose sensors, EKGs, electroencephalographs. These will probe and monitor cities and endangered species, the atmosphere, our ships, highways and fleets of trucks, our conversations, our bodies–even our dreams ....What will the earth’s new skin permit us to feel? How will we use its surges of sensation? For several years–maybe for a decade–there will be no central nervous system to manage this vast signaling network. Certainly there will be no central intelligence...some qualities of self-awareness will emerge once the Net is sensually enhanced. Sensuality is only one force pushing the Net toward intelligence”. These statements are quoted by an interview by Cherry Murray, Dean of the Harvard School of Engineering and Applied Sciences and Professor of Physics. It is interesting to outline the timeliness and highly predicting power of these statements. In particular, we would like to point to the relevance of the question “What will the earth’s new skin permit us to feel?” to the work we are going to discuss in this paper. There are many additional compelling questions, as for example: “How can the electronic earth’s skin be made more resilient?”; “How can the earth’s electronic skin be improved to better satisfy the need of our society?”;“What can the science of complex systems contribute to this endeavour?”

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JOURNAL: THE EUROPEAN PHYSICAL JOURNAL SPECIAL TOPICS Vol. 214 (November II 2012)"Participatory Science and Computing for Our Complex World".

http://epjst.epj.org/index.php?option=com_toc&url=/articles/epjst/abs/2012/14/contents/contents.html

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Complexity Aided Design: The FuturICT Technological Innovation Paradigm

Complexity Aided Design: The FuturICT Technological Innovation Paradigm | FuturICT Journal Publications | Scoop.it
The European Physical Journal,  Special Topics, Published Online 05 December 2012 A. Carbone, M. Ajmone-Marsan, K.W. Axhausen, M. Batty, M. Masera, and E. Rome “In the next century, planet earth wi...
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FuturICT: Participatory computing to understand and manage our complex world in a more sustainable and resilient way: D. Helbing, S. Bishop, R. Conte, P. Lukowicz, J. B. McCarthy

FuturICT: Participatory computing to understand and manage our complex world in a more sustainable and resilient way: D. Helbing, S. Bishop, R. Conte, P. Lukowicz, J. B. McCarthy | FuturICT Journal Publications | Scoop.it
We have built particle accelerators to understand the forces that make up our physical world. Yet, we do not understand the principles underlying our strongly connected, techno-socio-economic systems. We have enabled ubiquitous Internet connectivity and instant, global information access. Yet we do not understand how it impacts our behavior and the evolution of society.

To fill the knowledge gaps and keep up with the fast pace at which our world is changing, a Knowledge Accelerator must urgently be created. The financial crisis, international wars, global terror, the spreading of diseases and cyber-crime as well as demographic, technological and environmental change demonstrate that humanity is facing serious challenges. These problems cannot be solved within the traditional paradigms.

Moving our attention from a component-oriented view of the world to an interaction-oriented view will allow us to understand the complex systems we have created and the emergent collective phenomena characterising them. This paradigm shift will enable new solutions to long-standing problems, very much as the shift from a geocentric to a heliocentric worldview has facilitated modern physics and the ability to launch satellites.

The FuturICT flagship project will develop new science and technology to manage our future in a complex, strongly connected world. For this, it will combine the power of information and communication technology (ICT) with knowledge from the social and complexity sciences.

ICT will provide the data to boost the social sciences into a new era. Complexity science will shed new light on the emergent phenomena in socially interactive systems, and the social sciences will provide a better understanding of the opportunities and risks of strongly networked systems, in particular future ICT systems. Hence, the envisaged FuturICT flagship will create new methods and instruments to tackle the challenges of the 21st century.

FuturICT could indeed become one of the most important scientific endeavours ever, by revealing the principles that make socially interactive systems work well, by inspiring the creation of new platforms to explore our possible futures, and by initiating an era of social and socio-inspired innovations.
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JOURNAL: THE EUROPEAN PHYSICAL JOURNAL SPECIAL TOPICS  Vol. 214 (November II 2012)"Participatory Science and Computing for Our Complex World".

http://link.springer.com/journal/11734/214/1/page/1

http://epjst.epj.org/index.php?option=com_toc&url=/articles/epjst/abs/2012/14/contents/contents.html

 

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FuturICT: Linking science and arts: Intimate science, shared spaces and living experiments - Springer

FuturICT: Linking science and arts: Intimate science, shared spaces and living experiments - Springer | FuturICT Journal Publications | Scoop.it

J. Perelló, D. Murray-Rust, A. Nowak, S. R. Bishop

We aim to move beyond the idea of art as a tool for communicating science, towards a truly interdisciplinary practice where art and public engagement are a fundamental part of the way that science is carried out as promoted by the FuturICT project. Artistic exploration can have a scientific impact when artists act as designers, catalyzers and coordinators of experiments, which scientists interpret and respond to. We propose the creation of a travelling show, consisting of a set of core exhibits and ‘living experiments’: interactive, evolving pieces which blend artistic experience and scientific research. We also propose the creation of a new production oriented, distributed, inter-institutional research centre, focused on developing parallel relations between artistic practice and diverse fields of science. All these initiatives will be aligned with different areas of the FuturICT project, using different aspects of the Living Earth Simulator, Planetary Nervous System, and Knowledge Accelerator to support the creation of rich, interactive, collaborative experiences and in close contact with the educational and participatory platforms of FuturICT.

FuturICT's insight:

JOURNAL: THE EUROPEAN PHYSICAL JOURNAL SPECIAL TOPICS  Vol. 214 (November II 2012)"Participatory Science and Computing for Our Complex World".

http://epjst.epj.org/index.php?option=com_toc&url=/articles/epjst/abs/2012/14/contents/contents.html

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Bankruptcy cascades in interbank markets: Gabriele Tedeschi, Amin Mazloumian, Mauro Gallegati, Dirk Helbing

Bankruptcy cascades in interbank markets: Gabriele Tedeschi, Amin Mazloumian, Mauro Gallegati, Dirk Helbing | FuturICT Journal Publications | Scoop.it

We study a credit network and, in particular, an interbank system with an agent-based model. To understand the relationship between business cycles and cascades of bankruptcies, we model a three-sector economy with goods, credit and interbank market. In the interbank market, the participating banks share the risk of bad debits, which may potentially spread a bank’s liquidity problems through the network of banks. Our agent-based model sheds light on the correlation between bankruptcy cascades and the endogenous economic cycle of booms and recessions. It also demonstrates the serious trade-off between, on the one hand, reducing risks of individual banks by sharing them and, on the other hand, creating systemic risks through credit-related interlinkages of banks. As a result of our study, the dynamics underlying the meltdown of financial markets in 2008 becomes much better understandable.

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Bankruptcy cascades in interbank markets: Gabriele Tedeschi, Amin Mazloumian, Mauro Gallegati, Dirk Helbing

In this paper, we study a credit network and, in particular, an interbank system in an agent-based model. To understand the relationship between business cycles and cascade of bankruptcies, we model a three-sector economy with goods, credit and interbank market. In the interbank market, the participating banks share the risk of bad debits, which may potentially spread one bank's crisis through the network of banks. Our agent-based model specifically sheds light on the correlation between the endogenous economic cycle and the trade-off between sharing risk and systemic risk. The purpose of the model is thus to determine whether the linear relationship proposed by Allen and Gale (2000) ceases to be valid during certain periods of the economic cycle.

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Irena Vodenska: Complexity and Systemic Risk Propagation in Economic Networks #FuturICT workshop #MITMediaLab

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Irena Vodenska's Presentation at FuturICT Workshop 13/14 Feb at MIT Media Lab

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Michael Szell: Online games as platform for measuring socio-economic behaviour #MITmedialab #FuturICT

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Michael Szell's Presentation at FuturICT Workshop 13/14 Feb at MIT Media Lab

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Jeff Johnson: Hypernetworks for Policy Design at #MITmedialab #FuturICT #ou

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Ramesh Jain: Toward Intelligent Social Systems #FuturICT Workshop #MITMediaLab

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Paul Lukowicz: The #ICT Vision of #FuturICT at #MITMediaLab

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Paul Lukowicz's Presentation at FuturICT Workshop 13/14 Feb at MIT Media Lab

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Global Multi-Level Analysis of the ‘Scientific Food Web' : Scientific Reports : Nature Publishing Group

Global Multi-Level Analysis of the ‘Scientific Food Web' : Scientific Reports : Nature Publishing Group | FuturICT Journal Publications | Scoop.it
We introduce a network-based index analyzing excess scientific production and consumption to perform a comprehensive global analysis of scholarly knowledge production and diffusion on the level of continents, countries, and cities.
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FuturICT - Towards integrative risk management and more resilient societies

FuturICT - Towards integrative risk management and more resilient societies | FuturICT Journal Publications | Scoop.it

Towards integrative risk management and more resilient societies

D. Al-Khudhairy, K. Axhausen, S. Bishop, H. Herrmann, B. Hu, W. Kröger, T. Lewis, J. MacIntosh, A. Nowak, S. Pickl, D. Stauffacher, E. Tan

 

Society depends decisively on the availability of infrastructure systems such as energy, telecommunication, transportation, banking and finance, health care and governmental and public administration. Even selective damages of one of these infrastructures may result in disruptions of governmental, industrial or public functions. Vulnerability of infrastructures therefore provides spectacular leverage for natural disasters as well as criminal and terrorist actions. Threats and risks are part of the technological, economical, and societal development. This article focuses on the development and characterization of an integrative risk-management which, from the perspective of “resilient systems”, can be seen as an innovative and pro-active crisis management approach dealing with the increasing amount of complexity in societies in a comprehensive, agile and adaptive way.

FuturICT's insight:

JOURNAL: THE EUROPEAN PHYSICAL JOURNAL SPECIAL TOPICS Vol. 214 (November II 2012)"Participatory Science and Computing for Our Complex World".
http://epjst.epj.org/index.php?option=com_toc&url=/articles/epjst/abs/2012/14/contents/contents.html

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Modeling complex systems with adaptive networks

Modeling complex systems with adaptive networks | FuturICT Journal Publications | Scoop.it

Adaptive networks are a novel class of dynamical networks whose topologies and states coevolve. Many real-world complex systems can be modeled as adaptive networks, including social networks, transportation networks, neural networks and biological networks. In this paper, we introduce fundamental concepts and unique properties of adaptive networks through a brief, non-comprehensive review of recent literature on mathematical/computational modeling and analysis of such networks. We also report our recent work on several applications of computational adaptive network modeling and analysis to real-world problems, including temporal development of search and rescue operational networks, automated rule discovery from empirical network evolution data, and cultural integration in corporate merger.

 

Modeling complex systems with adaptive networks
Hiroki Sayama, , , Irene Pestov, Jeffrey Schmidt, Benjamin James Bush, Chun Wong, Junichi Yamanoi, Thilo Gross

Computers & Mathematics with Applications

In Press, Corrected Proof

http://dx.doi.org/10.1016/j.camwa.2012.12.005


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City boundaries and the universality of scaling laws

This paper investigates the universality and robustness of scaling laws for urban systems, according to the work by Bettencourt, Lobo and West among others, using England and Wales as a case study. Initial results employing the demarcations for cities from the European Statistical Commission digress from the expected patterns. We therefore develop a method for producing multiple city definitions based on both morphological and functional characteristics, determined by population density and commuting to work journeys. For each of these realisations of cities, we construct urban attributes by aggregating high resolution census data. The approach produces a set of more than twenty thousand possible definitions of urban systems for England and Wales. We use these as a laboratory to explore the behaviour of the scaling exponent for each configuration. The analysis of a large set of urban indicators for the full range of system realisations shows that the scaling exponent is notably sensitive to boundary change, particularly for indicators that have a nonlinear relationship with population size. These findings highlight the crucial role of system description when attempting to identify patterns of behaviour across cities, and the need for consistency in defining boundaries if a theory of cities is to be devised.

 

City boundaries and the universality of scaling laws

Elsa Arcaute, Erez Hatna, Peter Ferguson, Hyejin Youn, Anders Johansson, Michael Batty

http://arxiv.org/abs/1301.1674


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FuturICT: Socio-inspired ICT

FuturICT: Socio-inspired ICT | FuturICT Journal Publications | Scoop.it

Socio-inspired ICT

A. Ferscha, K. Farrahi, J. van den Hoven, D. Hales, A. Nowak, P. Lukowicz, D. Helbing

Modern ICT (Information and Communication Technology) has developed a vision where the “computer” is no longer associated with the concept of a single device or a network of devices, but rather the entirety of situated services originating in a digital world, which are perceived through the physical world. It is observed that services with explicit user input and output are becoming to be replaced by a computing landscape sensing the physical world via a huge variety of sensors, and controlling it via a plethora of actuators. The nature and appearance of computing devices is changing to be hidden in the fabric of everyday life, invisibly networked, and omnipresent, with applications greatly being based on the notions of context and knowledge. Interaction with such globe spanning, modern ICT systems will presumably be more implicit, at the periphery of human attention, rather than explicit, i.e. at the focus of human attention.Socio-inspired ICT assumes that future, globe scale ICT systems should be viewed as social systems. Such a view challenges research to identify and formalize the principles of interaction and adaptation in social systems, so as to be able to ground future ICT systems on those principles. This position paper therefore is concerned with the intersection of social behaviour and modern ICT, creating or recreating social conventions and social contexts through the use of pervasive, globe-spanning, omnipresent and participative ICT.

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JOURNAL: THE EUROPEAN PHYSICAL JOURNAL SPECIAL TOPICS Vol. 214 (November II 2012)"Participatory Science and Computing for Our Complex World".
http://epjst.epj.org/index.php?option=com_toc&url=/articles/epjst/abs/2012/14/contents/contents.html

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Exploring complex networks by means of adaptive walkers: APS- Luce Prignano Yamir Moreno, and Albert Díaz-Guilera

Exploring complex networks by means of adaptive walkers: APS- Luce Prignano Yamir Moreno, and Albert Díaz-Guilera | FuturICT Journal Publications | Scoop.it

Luce Prignano, Yamir Moreno, and Albert Díaz-Guilera 

Received 2 March 2012; published 26 December 2012

Finding efficient algorithms to explore large networks with the aim of recovering information about their structure is an open problem. Here, we investigate this challenge by proposing a model in which random walkers with previously assigned home nodes navigate through the network during a fixed amount of time. We consider that the exploration is successful if the walker gets the information gathered back home, otherwise no data are retrieved. Consequently, at each time step, the walkers, with some probability, have the choice to either go backward approaching their home or go farther away. We show that there is an optimal solution to this problem in terms of the average information retrieved and the degree of the home nodes and design an adaptive strategy based on the behavior of the random walker. Finally, we compare different strategies that emerge from the model in the context of network reconstruction. Our results could be useful for the discovery of unknown connections in large-scale networks.

©2012 American Physical Society

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