Feedback loops amplify small changes in chaotic systems from "summary" of Chaos by James Gleick
In a chaotic system, even the smallest change can have significant repercussions. This is due in part to the presence of feedback loops, which can amplify these small changes and cause unpredictable outcomes. Feedback loops are inherent in many natural systems, from the weather to the stock market. A simple example of a feedback loop can be seen in a thermostat. When the temperature in a room drops below a certain point, the thermostat turns on the heater. As the room heats up, the thermostat detects this change and turns off the heater. This process continues, with the thermostat constantly adjusting to maintain a stable temperature. Feedback loops can be positive or negative. A positive feedback loop amplifies a small change, leading to exponential growth or collapse. An example of this is a population of r...Similar Posts
Fostering innovation requires openness
Innovation thrives in environments where ideas can flow freely, where information is readily accessible, and where individuals ...
Progress is not predestined
Progress is not predestined. It does not follow a predetermined path laid out for it by some higher power or invisible hand. Th...
Behavioral finance complements traditional models
In the quest to understand the complexities of financial markets, traditional models have long been the go-to framework. These ...
Death and decay are essential parts of the cycle of life
The world is a place of constant change and transformation, where life and death are intertwined in a delicate dance. In nature...
Exchange rates affect trade balances
Exchange rates play a critical role in determining the trade balances between countries. When a country's currency depreciates ...
Learning organizations embrace diversity and inclusivity
In a learning organization, diversity and inclusivity are not just buzzwords or checkboxes to be ticked off. They are fundament...
Be aware of external factors influencing markets
Understanding the markets requires more than just looking at numbers and charts. It involves a deep awareness of the external f...
Systems are defined by their structure and behavior
The structure and behavior of a system are what define its essence and determine how it functions within its environment. A sys...
Strive to become antifragile in all aspects of life
The central idea behind antifragility is the concept of gaining from disorder, rather than simply withstanding it. Antifragile ...
Focus on longterm results, not short-term wins
When we focus on short-term wins, we are often tempted to make decisions that provide immediate gratification but may not be in...