 Redomaining Equilibrium EconomicsChapter Chapter 3 in Evolutionary Economics, 2024, pp 37-56 from Springer Abstract: Abstract There is a historically famous story that equilibrium could not be attained even if time were taken infinitely. The notion of equilibrium will no longer have the classical strict meaning: equality between supply and demand. The dominance of HFTHigh Frequency Trading/Transaction (HFT) has actually forced the financial market into a new system where the physical distance from the transaction server at the trader’s location becomes a decisive factor to realize a transaction. Outside equilibrium, in contrast, we can observe that arbitrage opportunities will never disappear but rather reinforce themselves. Usually, a successful extra profit earner can then increase the size of his order if he follows the martingale rule. If he is successful, his earnings could double. In this case, his dynamics will have the same form as the rich-get-richerRich-get-richer process. The dynamic description is depicted as a fractal map. The power law distributionPower law distribution will be deduced from it. It seems intuitively natural that the variance of expenditures among the richest is larger than that among average consumer because rich consumers are used to spending more for their particular purposes, such as purchasing ships or airplanes. Given a new society, the law of demand would be alternatively explained by focusing on another property: the variance of an income class increases as its class category rises from the bottom to the top. Here a usual meaning of the microscopic rationality will then be lost. In addition, we will learn various other topics for redomainingRedomaining equilibrium economics. Interestingly, students studying disciplines other than economics occasionally question why the prisoner’s dilemma does not hold in real life. They sometimes have a strong sense of discomfort regarding an occurrence of such a dilemma. In fact, such dilemmas do not necessarily occur in daily life. To be sure, real life incurs irrational conclusions. In many cases, however, better solutions are occasionally found to solve dilemmas. The more the realties are added, the more the boundary condition will be imposed to find a particular solution. Thus, the tree of boundary conditions will grow until the original implication may be lost. Date: 2024 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:spr:sptchp:978-981-97-1382-0_3 Ordering information: This item can be ordered from DOI: 10.1007/978-981-97-1382-0_3 Access Statistics for this chapter More chapters in Springer Texts in Business and Economics from Springer |
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