tag:blogger.com,1999:blog-6837159629100463303.post1446448179739468957..comments2021-07-22T00:29:53.205-07:00Comments on Information Transfer Economics: The price system as a communication channelJason Smithhttp://www.blogger.com/profile/12680061127040420047noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-6837159629100463303.post-35333622274970059792015-03-11T14:51:25.380-07:002015-03-11T14:51:25.380-07:00Hello,
Thanks for the heads up.
I commented on t...Hello,<br /><br />Thanks for the heads up.<br /><br />I commented on the thread, but to answer here: I have read several of Foley's papers -- when I thought I stumbled on a novel approach, I immediately tried to search as much of the literature I could to make sure I wasn't reinventing the wheel or saying something obviously wrong. Foley's work came up, but he focuses on utility maximization (which may be the information equilibrium model I mention in the post above in brackets).<br /><br />Regarding your other question, here's what I wrote on the econ rumors thread:<br /><br />The additional information comes from the increased number of bits required to describe the allocation of an increased number of goods sold/demanded. If there are 3 widgets and two agents, there are 4 ways to allocate the widgets (3 + 0, 2 + 1, 1 + 2 and 0 + 3). If there are 4 widgets and 2 agents, there are 5 ways. That's an increase in the information content of an allocation of about 1/3 of a bit: log_2(5) - log_2(4) = 0.32.Jason Smithhttps://www.blogger.com/profile/12680061127040420047noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-557819786538965642015-03-11T14:04:21.610-07:002015-03-11T14:04:21.610-07:00The post at econjobrumor asks you whether you'...The post at econjobrumor asks you whether you've read Duncan Foley's works about statistical equilibrium. Also, the formula for I_d and I_s in your information transfer model has n_s and n_d, which suggests that if there is more demand and more supply, there is more information. However, this does not seem to be necessarily right. If I am getting your model wrong, please inform me. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-22914942383872721582015-03-11T08:18:07.542-07:002015-03-11T08:18:07.542-07:00Thanks for the advice. Actually, the first paper w...Thanks for the advice. Actually, the first paper was going to be mostly just reproducing a bunch of well-known (and old) macro models and stylized facts (e.g. how you would construct the IS-LM model, the quantity theory and Okun's law)<br /><br /><a href="http://informationtransfereconomics.blogspot.com/2015/02/information-equilibrium-paper-draft.html" rel="nofollow">http://informationtransfereconomics.blogspot.com/2015/02/information-equilibrium-paper-draft.html</a><br /><br />The only new bit will be a "small-ish" result that assumptions like Calvo pricing may actually be trying to capture an "entropic force" (in this case, nominal rigidity) as a micro effect -- and maybe such assumptions are not necessary.Jason Smithhttps://www.blogger.com/profile/12680061127040420047noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-56030772527340255622015-03-10T21:10:33.747-07:002015-03-10T21:10:33.747-07:00Quick suggestion:
Maybe it's not such a good ...Quick suggestion:<br /><br />Maybe it's not such a good idea to try to get a holistic paper published but to publish a series of papers where you prove something small-ish using this theory. If you talk within the context of economic orthodoxy while incorporating ideas from this context, people may be a lot more receptive.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-80642294883545624122015-03-10T12:55:58.021-07:002015-03-10T12:55:58.021-07:00Ah, I see. In that case the answer is maximum entr...Ah, I see. In that case the answer is maximum entropy:<br /><br /><a href="http://en.wikipedia.org/wiki/Principle_of_maximum_entropy" rel="nofollow">http://en.wikipedia.org/wiki/Principle_of_maximum_entropy</a><br /><br />In thermodynamics, you are in equilibrium when entropy is maximized (or free energy or Gibbs free energy).<br /><br /><a href="http://en.wikipedia.org/wiki/Thermodynamic_equilibrium#Conditions_for_thermodynamic_equilibrium" rel="nofollow">http://en.wikipedia.org/wiki/Thermodynamic_equilibrium#Conditions_for_thermodynamic_equilibrium</a>Jason Smithhttps://www.blogger.com/profile/12680061127040420047noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-15030830116234284122015-03-10T12:38:03.721-07:002015-03-10T12:38:03.721-07:00that definitely answers part of it...the rest is m...that definitely answers part of it...the rest is more along the lines of once I have made the assumptions I want about the system (or lack of assumptions as seems to be the real power of this method) when should I be in information equilibrium? in the context of the economy you have mentioned correlation of actions/expectations of economic agents...what is the general principle that such behavior are in violation ofLALhttps://www.blogger.com/profile/08196675112184615614noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-83852861803157449102015-03-09T22:11:07.564-07:002015-03-09T22:11:07.564-07:00Hi LAL,
If you are referring to whether a random ...Hi LAL,<br /><br />If you are referring to whether a random process must be Markov or something similar, there are not any restrictions of that nature. On this blog I've actually assumed that the processes could be completely deterministic, just sufficiently complex to <i>appear</i> random.<br /><br />I've used AR processes e.g. here:<br /><br /><a href="http://informationtransfereconomics.blogspot.com/2014/03/the-monetary-base-as-sand-pile.html" rel="nofollow">http://informationtransfereconomics.blogspot.com/2014/03/the-monetary-base-as-sand-pile.html</a><br /><br />Most stochastic processes should work. I might be misunderstanding your question, though.Jason Smithhttps://www.blogger.com/profile/12680061127040420047noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-33738072661703411022015-03-09T19:20:05.481-07:002015-03-09T19:20:05.481-07:00quick question, what kinds of assumptions of rando...quick question, what kinds of assumptions of randomness do I need to reach information equilibrium ? the P. Fielitz, G. Borchardt paper is a little too information theoryisch for me...so i have trouble coming up with examples outside of signal process that should satisfy their properties..LALhttps://www.blogger.com/profile/08196675112184615614noreply@blogger.com