| Readings |
- How
hits happen - Forecasting Predictability in a Chaotic Marketplace.
What makes a hit a hit? How does a movie like Titanic captivate
the public eye-and break box office records worldwide? What set
Hootie and the Blowfish apart from countless other bands struggling
to make it big-enabling them to sell more than 13 million copies
of their debut album? What forces thrust Tickle Me Elmo to the
top of every child's Christmas list last year, creating a feeding
frenzy and waiting lists several months long? Just how do hits
happen? Managers and marketing gurus alike have struggled to
find the answers for years. Using outdated strategies and theories,
they make foggy predictions based on past performance. Yet no
matter how much research and marketing money you pour into a
product, the biggest hits always seem to come out of the blue.
But do they really? In How Hits Happen, Winslow Farrell offers
a breakthrough approach to uncovering the hidden patterns behind
hits. Applying complexity theory-the science that examines the
interactions of various factors in complex systems-to modern
business problems, How Hits Happen reveals how the actions of
synthetic customers shed light on consumer behavior in the natural
world. These computer-generated "consumers" embody
quirks and contradictions, motivations and behaviors that uncannily
resemble our own. They shop, go to movies, listen to music, and
form cliques-in turn making or breaking the virtual products
they're confronted with. Motivated by popularity, product placement,
advertising, and simple preferences, their purchases are a powerful
predictor of the next giant hit or the next huge flop. How Hits
Happen turns the findings of this technology into a practical,
accessible guide to consumer behavior for businesspeople everywhere,
from marketing managers to management consultants, strategic
planners to small-business owners. Fascinating, compelling, and
truly revolutionary, it reveals invaluable lessons for managers
in any real-life industry.
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- "Hysteresis
in an Evolutionary Labor Market with Adaptive Search"
(ps,307K), ISU Economic Report 50, October 1999. Real-world labor
markets are characterized by highly heterogeneous earnings relative
to observable heterogeneity in worker and employer attributes.
This study uses an agent-based computational economics model
of a labor market to undertake a systematic experimental study
of how capacity asymmetries between workers and employers can
induce persistent heterogeneity in average earnings and employment
histories across workers with initially identical observable
structural attributes, and similarly for employers. This persistent
heterogeneity arises because workers and employers repeatedly
engage in a costly adaptive search for worksite partners and
evolve their worksite behaviors over time, which can result in
path dependency (hysteresis) effects. Particular attention is
focused on the experimental determination of correlations between
capacity asymmetries and the formation of contractual networks
among workers and employers, and between contractual network
formation and the types of worksite interactions and earnings
outcomes that these contractual networks support.
- "A
C++ Platform for the Evolution of Trade Networks" (ps,244K)
(with D. McFadzean), Economic Report No. 39, Iowa State University,
Revised: June 1999. To appear in Computational Economics.
This study provides a detailed discussion of the C++ implementation
of the Trade Network Game (TNG), a computational framework for
studying the formation and evolution of trade networks in buyer-seller
markets modelled as decentralized systems of autonomous interacting
agents.
- "A
Trade Network Game with Endogenous Partner Selection" (ps,151K),
Economic Report No. 36, Revised: June 1996. Final version appears
as pp. 249--269 in H. M. Amman, B. Rustem, and A. B. Whinston
(eds.), Computational Approaches to Economic Problems,
Kluwer Academic Publishers, 1997.
This study develops a Trade Network Game (TNG) framework for
studying the interplay between evolutionary game dynamics and
preferential partner selection in buyer-seller markets. The TNG
consists of successive generations of resource-constrained traders
who choose and refuse trade partners on the basis of continually
updated expected payoffs, engage in risky trades modelled as
two-person games, and evolve their trade strategies over time.
Preliminary computer experiments are reported which suggest that
the standard optimality properties used to judge the desirability
of matching mechanisms in static market contexts may be inadequate
measures of optimality from an evolutionary perspective.
- "How
Economists Can Get Alife" (ps,226K), Economic Report
No. 37, Revised: March 1997. Final version appears as pp. 533--564
in W. Brian Arthur, Steven Durlauf, and David Lane (eds.), The
Economy as an Evolving Complex System, II, Santa Fe Institute
Studies in the Sciences of Complexity, Volume XXVII, Addison-Wesley,
1997.
This study presents a summary overview of the basic artificial
life (alife) paradigm, stressing aspects especially relevant
for the study of decentralized market economies. In particular,
recent work on a "Trade Network Game (TNG)" framework
combining evolutionary game play with endogenous partner selection
is used to illustrate how the alife paradigm might be specialized
to economics. Analytical and simulation work is reported to show
how the TNG is currently being used to study the evolutionary
implications of alternative market structures at three different
levels: individual trade behavior; trade network formation; and
social welfare.
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