System for economic simulation

[whswhs]

Originally Posted by Alonsua

Well, by real time I mean something like daily or weekly updates, so I can allocate any current and real "growth" to the player companies, if they are doing good enough in comparison with other companies. With the statement of "opening new markets" I have to agree, but the economic flux needs to come from somewhere, and unless the company pays its workers with those "games", they need to obtain the money from somewhere, and it is quite unprobable that their salaries will raise in order to buy the game, so that company would need to "steal" the market share of another company. I dont need an intensive segmentation, something like "Entertainment" or "Alimentary" may do it, so that specific company may "steal" some market share from television, software, recreatives (and this may all go in the background, with "Entertainment" being the working data)... :)

You seem to be talking about monetary income. There are three things to say about that:

1. Monetary income can increase if the money supply increases. This doesn't have to be inflationary, though it often is; if the money supply increases at the same rate as real output, there will be no overall inflation, and if real output increases faster, there will be deflation.

2. Even if the money supply doesn't change, you can get higher prices by increasing the rate at which money flows through the economy, because that lets you use the same unit of money for more purchase per year.

3. Most importantly, though, focusing on money is irrelevant to wealth. Money is not wealth; that was the key insight of Adam Smith's that was the starting point for economic science. Wealth is goods and services. And if you start a new business, and it succeeds, you're putting new goods or services into the economy, and likely a larger volume of goods and services than the older businesses could provide. So, yes, the older company that used older methods to produce a smaller volume of goods and services loses out, but the economy as a whole gains in real terms.

[sir_pudding]

Originally Posted by Alonsua

With the statement of "opening new markets" I have to agree, but the economic flux needs to come from somewhere, and unless the company pays its workers with those "games", they need to obtain the money from somewhere, and it is quite unprobable that their salaries will raise in order to buy the game, so that company would need to "steal" the market share of another company.

Sometimes people's incomes do increase, notably quite a large relative amount when they enter the workforce, or when they get a promotion or a better job. More importantly though overall wealth can increase and everybody on average gets to buy more stuff. This is why you aren't a shoeless peasant living in a thatch roofed hut. Often this means that some stuff is cheaper relative to purchasing power over time and you are able to use the surplus for something else, and still buy the same stuff you did before, and nobody loses any customers.

[whswhs]

Originally Posted by Anthony

I'm a bit unsure on what you're actually trying to accomplish. Accurate economic simulations don't really exist (and probably cannot -- because people would promptly start using the economic simulator in economic activity, which will then run head-first into Gödel's incompleteness theorem). Good enough for gaming simulations might exist, but sort of depends on what you want to simulate.

My model of making choices is that you make a prediction of your own future action, and of its consequences, and observe your emotional reaction; and if that's unfavorable, you make a different prediction of a different future action, and keep on until your predictions converge. And of course there are times when they don't: "O my daughter! O my ducats! O my ducats! O my daughter!"

Economics is about the same thing, but with different people's choices and predictions needing to coordinate; and when they don't coordinate properly there's an opportunity for arbitrage, which tends to bring about further convergence, though not infallibly.

If we had an actual predictive algorithm for economics, it might enhance the speed and reliability of predictions, so that the economy could get to an optimal allocation of resources faster. And people who had access to such an algorithm would be able to collect the gains from arbitrage. We could fantasize that maybe it would turn out that economic problems all converged, but it's just as likely that we'd have competing predictive algorithms trying to outsmart each other. And that's really no different from duelling precognitives. If you're going to try to act on your predictions of my actions, then my predictions of your actions will include what you do, and I can change my actions. So as soon as you stop just observing the problem becomes intractible.

Of course there's also the problem that people will try to game the system by supplying evidence to the predictive algorithm that misleads it in their own favor. At least Gödel wasn't dealing with numbers that gained benefits from lying to him. . . .

[Alonsua]

Well, I dont need to make predictions, just to set some kind of "worldly demand per industry/sector" which responds to the size of the population, the production will be probably set at a specific/fixed ratio related to the size of assets... or something like that (otherwise the production would vary among the different sectors, which might be interesting if it doesn´t get too hard, because it sets the players on the way to fighting over the best industries/sectors). Maybe I can introduce some kind of "technology level" for modifiers of x0.50 (-1) x2 (+1), and that´s all.

[Alonsua]

Originally Posted by whswhs

My model of making choices is that you make a prediction of your own future action, and of its consequences, and observe your emotional reaction; and if that's unfavorable, you make a different prediction of a different future action, and keep on until your predictions converge. And of course there are times when they don't: "O my daughter! O my ducats! O my ducats! O my daughter!"

Economics is about the same thing, but with different people's choices and predictions needing to coordinate; and when they don't coordinate properly there's an opportunity for arbitrage, which tends to bring about further convergence, though not infallibly.

If we had an actual predictive algorithm for economics, it might enhance the speed and reliability of predictions, so that the economy could get to an optimal allocation of resources faster. And people who had access to such an algorithm would be able to collect the gains from arbitrage. We could fantasize that maybe it would turn out that economic problems all converged, but it's just as likely that we'd have competing predictive algorithms trying to outsmart each other. And that's really no different from duelling precognitives. If you're going to try to act on your predictions of my actions, then my predictions of your actions will include what you do, and I can change my actions. So as soon as you stop just observing the problem becomes intractible.

Of course there's also the problem that people will try to game the system by supplying evidence to the predictive algorithm that misleads it in their own favor. At least Gödel wasn't dealing with numbers that gained benefits from lying to him. . . .

So far I have designed a complicated algorythm that allows me to associate company growth and maximum value with the skills standing for "Finance", "Administration" and "Merchant" with modifiers coming from previous results of "Propaganda". This algorythm allows me to set up things like revenue, production, costs, employees and growth, but now I need to set up how the specific markets perform relative to any specific company :S

Kind of results you get with a value of 24 in all associated skills and a mixture of sectors (Market Cap related to Revenue with a factor per Industry: Pharma x5.08; Electronics x3.03; Health 1.32; Software 6.39):
https://ibb.co/n3TQJb

[thrash]

If what you need is "good enough for roleplaying," I recommend Corporate Shadowfiles for Shadowrun. It's not an economic simulator, but it covers most of the potential roleplaying scenarios involving high finance and corporate-level intrigue in enough detail to be useful for campaign planning. The mechanics are reasonably portable to other systems as well.

[Alonsua]

Originally Posted by whswhs

You seem to be talking about monetary income. There are three things to say about that:

1. Monetary income can increase if the money supply increases. This doesn't have to be inflationary, though it often is; if the money supply increases at the same rate as real output, there will be no overall inflation, and if real output increases faster, there will be deflation.

2. Even if the money supply doesn't change, you can get higher prices by increasing the rate at which money flows through the economy, because that lets you use the same unit of money for more purchase per year.

3. Most importantly, though, focusing on money is irrelevant to wealth. Money is not wealth; that was the key insight of Adam Smith's that was the starting point for economic science. Wealth is goods and services. And if you start a new business, and it succeeds, you're putting new goods or services into the economy, and likely a larger volume of goods and services than the older businesses could provide. So, yes, the older company that used older methods to produce a smaller volume of goods and services loses out, but the economy as a whole gains in real terms.

Inflation is not a problem, I can call for specific data and update prices accordingly, if so desired. You are right in that I mean monetary income, so to say, or spending, or whatever. Like if I set up a "Computers" market, I can call for a global revenue of 375 billions, so if a company got a revenue of 3.75 billions coming from computers, this company owns 1% of the market share.

[Alonsua]

Originally Posted by thrash

If what you need is "good enough for roleplaying," I recommend Corporate Shadowfiles for Shadowrun. It's not an economic simulator, but it covers most of the potential roleplaying scenarios involving high finance and corporate-level intrigue in enough detail to be useful for campaign planning. The mechanics are reasonably portable to other systems as well.

Thank you, allow me a few minutes to check on it

*Is there any synthesis of the important formulas? The book actually got a lot of pages :X

[whswhs]

Originally Posted by Alonsua

Inflation is not a problem, I can call for specific data and update prices accordingly, if so desired. You are right in that I mean monetary income, so to say, or spending, or whatever. Like if I set up a "Computers" market, I can call for a global revenue of 375 billions, so if a company got a revenue of 3.75 billions coming from computers, this company owns 1% of the market share.

In which case you aren't constrained to have that global revenue stay constant over time—I'm sure if you checked you would find that the global revenue of the computer industry has increased by orders of magnitude since 1948—or to have its increase be subtracted from the revenue of other industries.

[Anthony]

Originally Posted by whswhs

If we had an actual predictive algorithm for economics, it might enhance the speed and reliability of predictions, so that the economy could get to an optimal allocation of resources faster. And people who had access to such an algorithm would be able to collect the gains from arbitrage. We could fantasize that maybe it would turn out that economic problems all converged, but it's just as likely that we'd have competing predictive algorithms trying to outsmart each other.

As well as the issue of who gets the benefits of arbitrage, there are simple disagreements about what optimal allocation is.