Over the years we have written multiple posts about the economic convergence phenomenon. We have also provided a couple of interesting apps, which could be used to study the real world data. Recently we have updated one of them with new data from World Bank (see this post or go straight to the related app).

Furthermore we have modified the old app to work with somewhat different data. Namely, the old app plotted GDP per capita series and the new app plots GDP per capita PPP series. GDP PPP is more interesting to some researchers as this GDP index is controlled for differing price levels between the countries.

We invite you to explore the data using the new app!

To open the interactive browser-based program, click on the image or here.

Long ago we have implemented a simple traffic model, Nagel-Schreckenberg model (see this post). This model demonstrates how small errors or perturbations to traffic flow could amplify and cause traffic jams.

Further research in this direction suggests that we could slightly modify cruise control present in the most modern cars to try prevent traffic jams. A small change would be needed - cars just have to keep the same distance from the car in front of them as well as from the car behind them. See this Seeker video for more details.

The tragedy of the commons is a well known effect arising in game theory as a result of self-interested rational agents over-exploiting common good. While this arises in game theory, original concept comes from the XIXth century England. Those times it was customary for a village to have some small parcel of land, which could be used by villagers to let their cows graze. Over-grazing became commonly arising problem.

This problem applies more generally to any other common resource. For example, fish in the ocean, forests, public roads or even common fridge at work. If no rules or regulation is imposed, it is rational to deplete these resources and conserve private ones. This is extremely bad for the society. Hence it is named "tragedy".

It seems that Extra Credits found an interesting "sandbox" example in the realm of video games, which allows to see this tragedy in play from a different angle. This also allows to look for the solutions from a different perspective as well as teach further generations about what is wrong with our current state of affairs.

Couple of months ago I have started a series of posts on price formation in the free market or how and why the free market does (not) work. Last time I have provided concluding remarks on this topic. But would like to share some additional materials.

Couple of months ago I have started a series of posts on price formation in the free market or how and why the free market does (not) work.

In the first part of the series we have discussed economic laws of supply and demand. We have learned that the cheaper the product is the more people will be willing to buy it. Also that the more people are willing to pay for the product, the more of the product will be produced.

In the second part we have discussed a simple example in which printing press failed to predict the demand for the book. We have discussed how non-optimal prices emerge as a result of this miscalculation.

In the third part of the series we have discussed the implications of the cobweb model, which attempts to explain how the prices and produced quantity converge to equilibrium. We have noted that this convergence is not immediate and may take some time.

In the fourth part we have looked into the price formation from game theory perspective. We discussed why competition should emerge and why it might not. We had also discussed some interesting implications of the "price war" game, which highlight crucial importance of the competition.

In the fifth part we have also analyzed the proposed alternative to the "neo-liberal" idea of the globalization and the free trade. We have concluded that it is a terrible idea, which is neither novel, nor successful.

Through out this series of posts we have discussed few simple models lying behind the idea of free markets. We have discussed the assumptions, which are made and which must hold for the free markets to produce desirable outcome. From these posts, and many others on Physics of Risk, we should have obtained a good understanding that self-organization does not always result in a "good" (desired) outcome.