## Sunday, October 25, 2009

### Steps In the Model

Ok, at first glance, we have a lot of random people. They all have a model in their head of something they want to do.
1. First step, they have to overcome the initial difficulties in starting up this means clearing regulatory hurdles or finding ways of avoiding detection and getting funding.
2. Then comes the phase where they try to get more money to find the idea.
3. If the model matches a good way to keep functioning they stay functioning.
4. People modify and slightly randomise their model; also, more successful models are copied.
5. The entrepreneurs do business for a while.
6. The ones who have bad models lose.
7. The cycle repeats.

Now, this cycle happens all the time, for each entrepreneur. However step 4 means that when they go out of business (step 6) there is some tendency to do so in clusters. This explains how the .com crash and similar crashes happen.

Also, this model predicts says that if temporary methods are used to keep things afloat, the crash will be far worse in the future. This is because as long as entrepreneurial models seem successful they will be copied.

For math: Type your TeX math expression, in ....
For example \sqrt{a^2+b^2}
Looks like $$\sqrt{a^2+b^2}$$