## Saturday, 7 June 2008

### Complexity, the small and large scale

Tim Harford's post pointing to some work on complexity and economics is an excellent starting point for some stimulating reading. In particular, understanding how systems work by starting from the local behaviour of agents and working up, is a key insight. We need to remember that large-scale structures do emerge even from small-scale actions, so to get an efficient understanding you probably need to look at both levels.

The original post Tim is pointing to is by David Warsh, here so I suppose that's where I should really point. Tim gets the credit for introducing me to it, even though I have just read Warsh's interesting book, Knowledge and the Wealth of Nations.

Both mention Thomas Schelling, Nobel prize laureate who also wrote a great book on a similar subject - Micromotives and Macrobehaviour. I'll come back to all these topics in the future. My key theoretical work at present is working out what kind of structures exist for coordinating local incentives to achieve global outcomes. Schelling hints at this in his book but indicates that he knows of no taxonomy of such structures. A gauntlet I am trying to pick up.