Diversification versus specialization -- lessons from a noise driven linear dynamical system

Gabriell Mate and Zoltan Neda

Papers from arXiv.org

Abstract: Specialization and diversification are two major strategies that complex systems might exploit. Given a fixed amount of resources, the question is whether to invest this in elements that respond in a correlated manner to external perturbations, or to build a diversified system with groups of elements that respond in a not necessarily correlated manner. This general dilemma is investigated here using a high dimensional discrete dynamical system subject to an external noise, analyzing the statistical properties of an order parameter that quantifies growth. Our analytical solution suggests that diversification is a good strategy once the system has a fair amount of resources. For systems with small or extremely large supplies, we argue that specialization might be a more successful strategy. We discuss the results also from the perspective of economic and biologic systems.

Date: 2014-11
New Economics Papers: this item is included in nep-gro
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:1411.4756

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