How would you like to know the future, as who wouldn’t right? Well that exact concepts seems to be the goal of Lewis Fry Richardson a researcher who decided to look backwards at the military conflicts of the last century which turned out to be about 300 occurrences a surprising number in itself. However what he saw was even more interesting as the facts Richardson had found is that these “conflicts” followed the path of standard “power laws” which turned out to be a rather surprising discovery. As this means that even “independent” aggressive activities seek out a strong level of equilibrium rather than simply a chaotic knee jerk response if you will.
So we ask ourselves “why would this be of interest to us as many things follow power laws”, as we humans typically follow “power laws” as these also say the more we do something, the better we do it and therefore the more of something we do, yet the faster we will do it and so on until we hit a point of equilibrium in the system. It is at this point we see a “knee curve” in the graphic representation of the mathematical plot. Also in turn, because of this we can predict the next value of this occurrence in the progression with a high confidence level and therefore the future.
Using this concept, Dr. Richardson has shown that military conflict can also be forecasted in a similar fashion which means that these “actions” therefore follow a closed loop cause and effect pattern. In this each side attempts to achieve equilibrium as insurgents adjusted to occupier tactics and so on over and over again. Thus as one party moves, the reaction of the other has already adapted in short order countering the original move to reach a sort of stasis in the system.
This in turn is one of the reasons for drawn out conflicts as a repeated proliferation
of a Tit-for-Tat mentality will soon run out of steam as the initial phase produces the greatest results in the short run of the initial period as once it hits the “knee curve” yield is quickly lost as it turns into a game of equal distributions.
What’s interesting about this is that even in war as in business there is the same form of dance taking place as exampled by Sun Tzu’s The Art of War. As here the supplier and the consumer engagement react in a similar fashion to the “occupier” and “insurgent” actions only in the business world instead of the battlefield. As the business assaults the consumer with a battery of ads, in turn the consuming community responds to them in various adapting ways changing over time to match each [ad] incursion. The outcome of this is the equivalent of the Red Queen Race, borrowed from Lewis Carrol’s, Through the Looking Glass as you have to run twice as fast to just stay in the same place.
As once the “race” is reached, return is lost and itself is a basic conundrum of most businesses as they have a finite life before entering the “race” phase of the curve. In the early days they are darlings and as last call approaches the dogs come out and this new model will assuredly be watched by the quant community closely…