Feedback & Externalities

Follow along with the course eBook: https://systemsinnovation.io/books/ Take the full course: https://systemsinnovation.io/courses/ Twitter: http://bit.ly/2JuNmXX LinkedIn: http://bit.ly/2YCP2U6 In this module, we will be discussing the role of feedback loops with respect to self-organization by looking at how they work to promote or de-promote the synchronization of states between elements within complex adaptive systems. Transcription excerpt: We will start by talking about the different types of feedback loops while also discussing a number of examples, we will then look at positive and negative externalities and finish by talking about the effects of combining both feedback loops and externalities. A feedback loop defines a relationship of interdependency between two or more components where the change in state of one element effects that of another with this effect then in tern feeding back to alter the source element. This dynamic captured by feedback loops plays a fundamental role in the self-organization of elements within complex systems. When the state of elements within a system is independent from each other, then we can use statistics to model the synchronization of states between elements, for example say we have a hundred people in a town with just two banks A & B, if all other things are equal then we can model whether two people are customers of the same bank using simple statistics where approximately fifty percent of the people will be using any one of the banks. But if the usage of each bank is not independent, it is instead interdependent then it will no longer simply be statics governing the dynamics, it will now be these feedback loops of interdependencies. To illustrate this say more people are using bank A and this leads to over crowding in the bank this may then feedback to effect the users as they decide to go to bank B which is now quicker and easier to use, and likewise if bank B after sometime then becomes overcrowded people may move back to bank A. This is an example of a negative feedback where the state of one element effects the other in the opposite direction, we can see how the net result of this would be a stable system, if we had a hundred banks in this town governed by this rule the result would be a very evenly distributed and stable system where the agents occupy a wide variety of states with respect to the banks that they use. But imagine one day bank A starts a marketing campaign, putting up a big billboard saying for every customer we have we will give you one percent extra interest on your savings. The result of this would be that for every new customer the bank had it would present its self as a more attractive option for any other prospective customer. This is an example of a positive feedback where the more elements that adopt this state the stronger the attraction placed upon any other element is to also synchronize its state with this pattern of organization. Something to take away from this banking example is that in both the first and the second example, that is when we had random correlations or negative feedback between the element, both of these dynamics led to an overall stable state where the system tended towards an equilibrium, systems governed by these dynamics are linear, additive, we can create closed formula solutions to model them and they are the focus of most of our scientific framework. Twitter: http://bit.ly/2TTjlDH Facebook: http://bit.ly/2TXgrOo LinkedIn: http://bit.ly/2TPqogN