On the Evolution of Individualistic Preferences: Complete Versus Incomplete Information Scenarios.

We study the evolution of preferences via payoff monotonic dynamics in strategic environments with and without complete information. It is shown that, with complete information and subgroup matching, empirically plausible interdependent preference relations may entail the local instability of individualistic preferences (which target directly the maximization of material payoffs/fitness). The said instability may even be global if the subgroup size is large enough. In contrast, under incomplete information (unobservability of preference types), we show that independent preferences are globally stable in a large set of environments, and locally stable in essentially any standard environment, provided that the number of subgroups that form in thesociety is large. Since these results are obtained within the context of a very general model, they may be thought of as providing an evolutionary rationale for the prevalence of individualistic preferences.EVOLUTION; PREFERENCES; INCOMPLETE INFORMATION.

Self-organized evolution in socio-economic environments

We propose a general scenario to analyze social and economic changes in modern environments. We illustrate the ideas with a model that incorporating the main trends is simple enough to extract analytical results and, at the same time, sufficiently complex to display a rich dynamic behavior. Our study shows that there exists a macroscopic observable that is maximized in a regime where the system is critical, in the sense that the distribution of events follow power-laws. Computer simulations show that, in addition, the system always self-organizes to achieve the optimal performance in the stationary state.Comment: 4 pages RevTeX; needs epsf.sty and rotate.sty; submitted to Phys Rev Let

Economic Networks: The New Challenges

The current economic crisis illustrates a critical need for new and fundamental understanding of the structure and dynamics of economic networks. Economic systems are increasingly built on interdependencies, implemented through trans-national credit and investment networks, trade relations, or supply chains that have proven difficult to predict and control. We need, therefore, an approach that stresses the systemic complexity of economic networks and that can be used to revise and extend established paradigms in economic theory. This will facilitate the design of policies that reduce conflicts between individual interests and global efficiency, as well as reduce the risk of global failure by making economic networks more robust

Phase transitions in crowd dynamics of resource allocation

We define and study a class of resources allocation processes where $gN$ agents, by repeatedly visiting $N$ resources, try to converge to optimal configuration where each resource is occupied by at most one agent. The process exhibits a phase transition, as the density $g$ of agents grows, from an absorbing to an active phase. In the latter, even if the number of resources is in principle enough for all agents ($g<1$), the system never settles to a frozen configuration. We recast these processes in terms of zero-range interacting particles, studying analytically the mean field dynamics and investigating numerically the phase transition in finite dimensions. We find a good agreement with the critical exponents of the stochastic fixed-energy sandpile. The lack of coordination in the active phase also leads to a non-trivial faster-is-slower effect.Comment: 7 pages, 7 fig

Optimal network topologies for local search with congestion

The problem of searchability in decentralized complex networks is of great importance in computer science, economy and sociology. We present a formalism that is able to cope simultaneously with the problem of search and the congestion effects that arise when parallel searches are performed, and obtain expressions for the average search cost--written in terms of the search algorithm and the topological properties of the network--both in presence and abscence of congestion. This formalism is used to obtain optimal network structures for a system using a local search algorithm. It is found that only two classes of networks can be optimal: star-like configurations, when the number of parallel searches is small, and homogeneous-isotropic configurations, when the number of parallel searches is large.Comment: 4 pages. Final version accepted in PR

Dynamical instabilities in a simple minority game with discounting

We explore the effect of discounting and experimentation in a simple model of interacting adaptive agents. Agents belong to either of two types and each has to decide whether to participate a game or not, the game being profitable when there is an excess of players of the other type. We find the emergence of large fluctuations as a result of the onset of a dynamical instability which may arise discontinuously (increasing the discount factor) or continuously (decreasing the experimentation rate). The phase diagram is characterized in detail and noise amplification close to a bifurcation point is identified as the physical mechanism behind the instability.Comment: 8 page

The statistical laws of popularity: Universal properties of the box office dynamics of motion pictures

Are there general principles governing the process by which certain products or ideas become popular relative to other (often qualitatively similar) competitors? To investigate this question in detail, we have focused on the popularity of movies as measured by their box-office income. We observe that the log-normal distribution describes well the tail (corresponding to the most successful movies) of the empirical distributions for the total income, the income on the opening week, as well as, the weekly income per theater. This observation suggests that popularity may be the outcome of a linear multiplicative stochastic process. In addition, the distributions of the total income and the opening income show a bimodal form, with the majority of movies either performing very well or very poorly in theaters. We also observe that the gross income per theater for a movie at any point during its lifetime is, on average, inversely proportional to the period that has elapsed after its release. We argue that (i) the log-normal nature of the tail, (ii) the bimodal form of the overall gross income distribution, and (iii) the decay of gross income per theater with time as a power law, constitute the fundamental set of {\em stylized facts} (i.e., empirical "laws") that can be used to explain other observations about movie popularity. We show that, in conjunction with an assumption of a fixed lower cut-off for income per theater below which a movie is withdrawn from a cinema, these laws can be used to derive a Weibull distribution for the survival probability of movies which agrees with empirical data. The connection to extreme-value distributions suggests that popularity can be viewed as a process where a product becomes popular by avoiding failure (i.e., being pulled out from circulation) for many successive time periods. We suggest that these results may apply to popularity in general.Comment: 14 pages, 11 figure