Visiting Speaker: Paul Ormerod, Volterra Consulting
ACCS Visiting Speaker: Paul Ormerod
Speaker: Paul Ormerod, Volterra Consulting
When: Thursday 8 March 2007: 10.30AM Morning Tea, 11:00am: Talk
Venue: Room: 78-621/622 General Purpose South, UQ, St Lucia
Title: Cascades of Failure and Extinction in Evolving Complex Systems
There is empirical evidence from a range of disciplines that as the connectivity of a network increases, we observe an increase in the average fitness of the system. But at the same time, there is an increase in the proportion of failure/extinction events which are extremely large. The probability of observing an extreme event remains very low, but it is markedly higher than in the system with lower degrees of connectivity.
We are therefore concerned with systems whose properties are not static but which evolve dynamically over time. The focus, motivated by empirical examples, is on networks in which the robustness or fragility of the vertices is not given, but which themselves evolve over time.
We give examples from complex systems such as outages in the US power grid, the robustness properties of cell biology networks, and trade links, and the propagation of both currency crises and disease.
We consider systems which are populated by agents which are heterogeneous in terms of their fitness for survival. The agents are connected on a network, which evolves over time. In each period agents, take self-interested decisions to increase their fitness for survival to form alliances which increase the connectivity of the network.
The network is subjected to external negative shocks both with respect to the size of the shock and the spatial impact of the shock. We examine the size/frequency distribution of extinctions and how this distribution evolves as the connectivity of the network grows. The results are robust with respect to the choice of statistical distribution of the shocks.
The model is deliberately kept as parsimonious and simple as possible, and refrains from incorporating features such as increasing returns and externalities arising from preferential attachment which might bias the model in the direction of having the empirically observed features of many real world networks.
The model still generates results consistent with the empirical evidence: increasing the number of connections causes an increase in the average fitness of agents, yet at the same time makes the system as whole more vulnerable to catastrophic failure/extinction events on an near-global scale.
Paul is the author of best-selling books Butterfly Economics and The Death of Economics, and has over 20 years experience as an economic modeller and forecaster. He was senior UK forecaster and modeller at the National Institute of Economic and Social Research, London (1973-80), and then Head of the Economic Assessment Unit at the Economist newspaper group from 1980-82. As Director of Economics and Deputy MD of the Henley Centre for Forecasting for a decade, he was instrumental in building the Centre into a successful commercial enterprise. From 1983-1997 Paul was also Visiting Professor of Economics at the Universities of London and Manchester. His work on the application of techniques from statistical physics to economic phenomena is regularly published in leading physics journals. Recently nominated as The Times newspaper's preferred candidate for the role of UK government economist, Paul's new book, Why Most Things Fail, was published in Australia in 2005.