The landscape of innovation in bacteria, battleships, and beyond

Terence C. Burnham and Michael Travisano ()
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Terence C. Burnham: Argyros School of Business & Economics, Chapman University, Orange, CA 92866; Laboratory of Financial Engineering, Massachusetts Institute of Technology, Cambridge, MA 02142
Michael Travisano: Department of Ecology, Evolution and Behavior, University of Minnesota, Saint Paul, MN 55108; BioTechnology Institute, University of Minnesota, Saint Paul, MN 55108

Proceedings of the National Academy of Sciences, 2021, vol. 118, issue 26, e2015565118

Abstract: We draw lessons from microbial experimental evolution and naval warfare to improve the understanding of innovation in financial markets. Major financial innovations often arise without explicit societal planning because novel approaches can be favored by markets, in a manner strikingly parallel to natural selection. We utilize the concept of an adaptive landscape to characterize environments that increase the speed and magnitude of innovation. We apply this adaptive landscape framework to innovation in portfolio management. We create a general taxonomy for understanding and nurturing innovation.

Keywords: adaptation; experimental evolution; finance; innovation (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:nas:journl:v:118:y:2021:p:e2015565118

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