Even if the premise is wrong, the conclusion can still be correct as long as it is congruent with the empirical findings. There is no such thing as a false assumption, even if it is as outlandish as positing that trees are rational actors. There are only empirical discrepancies between prediction and reality.

The famous author is Milton Friedman, the essay is his famous The Methodology of Positive Economics, and his readership includes some 15,000 scholars who cite the essay, mostly approvingly. It changed modern economics.

Consider the density of leaves around a tree. I suggest the hypothesis that the…


This article also appeared in Comatch Insights.

Herb Simon used this thought experiment to raise one fundamental question about human nature: No matter which society we live in, capitalist market economy or socialist planned economy, we like to conduct the vast majority of our economic interactions inside those green blobs and rarely ever venture outside onto the red lines. Why?

Most of the green blobs we encounter, be it for-profit companies, non-profit organizations, or states, tend to have three things in common. They’re bounded, usually hierarchical, and — at least in theory — accountable.

Green blobs and red lines. Photo by Vino Li on Unsplash.

Accountability is the outcome of accounting…


Pittsburgh, the Iron City. Photo by Library of Congress.

Centered on the multifaceted interests of Herbert Simon, the research agenda of the GSIA faculty has been frequently described as “interdisciplinary”, but the focus of most of these efforts were on opening the black box of the firm and describing both its technical processes as a production function and its administrative processes as an organizational decision-making structure in far more detail than most economists of the time deemed useful.

One key building block of this revolution was the Carnegie Tech Management Game, the first computer-based simulation of corporate decision making, developed on the IBM 650 in 1957. Even if its…


The two steps of venture building

These two types require two very different modes of work. In operations research they are known as “branch and bound”. Within an established company, “research” and “development” are typically two separate organizations within overall product R&D.

The reason for this is simple: the skill set for doing creative work, and the work environment needed to get into a creative mindset, differ starkly from doing decisive work — the word decision itself comes from the proto root of “ripping off a branch”.

Pruning is an integral part of gardening, but few innovation groups, tasked with vertically integrating both creative (research) and…


I was recently asked what was the most obvious long-term effect of the “whiplash of 2020”. My answer was that every social change we’d usually expect to unfold within twenty years would suddenly only take five.

In the famous technology adoption curve proposed by Geoffrey Moore, new ideas often linger for ten or more years in the segments reserved for innovators and early adopters: people enamored with technology and willing to put up with its drawbacks.

But in 2020 companies all along the adopter spectrum were forced to experiment with challenges like working remotely. And many started to like it…


Just like the current discussion is driven by the accelerating pace of the information age replacing the industrial age, the mid 19th century financial innovations were the result of increasing industrialization colliding against the last vestiges of a rural, feudal society. In its midst were a group of social reformers.

Hotbeds of banking innovation. Photo by Angel Barnes on Unsplash

While the big banks that had formed in the big cities to provide entrepreneurs with capital, a large share of the population was shut out of the social progress. …


Photo by Carl Raw on Unsplash

William Vickrey wrote his first paper on auction theory in 1961, for which he won the Nobel Prize in 1996. Google (and Yahoo!) started implementing Vickrey auctions for ad markets around 2002.

George Akerlof finally got his Lemons Markets paper published in 1970. He won the Nobel in 2001, along with Spence and Stiglitz. SV startups using reputation engines to overcome information asymmetries are to numerous to fit into 280 characters.

Joe Stiglitz (1975) and Michael Spence (1973) proposed solutions to Akerlof’s information asymmetry problem, “screening” and “signaling”, which were applied in 1993 as a solution against DoS attacks and…


Growth matters. Photo by Tom Ezzatkhah on Unsplash

When you think of office plants, you probably think of the succulents your colleagues keep on their desks or the hardy perennials kept alive by the maintenance staff.

You probably don’t think of wellbeing, Internet of Things, or even how plants can become a decisive factor in the future organization of workspaces.

But this might change, now that the very idea of meeting up in the same office space in the same building in the same part of town to sit in front of computer screens has come under scrutiny.

Let’s face it, there were always two reasons why being…


The backdating exercise for Lombardy

This is dedicated to Todd LaPorte who taught me everything about zero-tolerance environments.

In a dynamic environment, we are watching echoes of past events, and it is important to shift these events back in time to avoid oversteering after the fact. Belated oversteering is the #2 reason why dynamic systems with information cascades become volatile and eventually collapse.

In a rapidly evolving scenario all incoming information is out of place and out of time, so it is important to put it into context. In particular, it is important to backdate information from when we receive an echo of an event…


Photo by Bernd Dittrich on Unsplash

Covid-19 is a supply chain disease.

[Check twitter for a friend link to this story]

The hypothesis expressed in a bit more detail:

Covid-19 is concentrated in a mid population density, high small-industry, high particulate matter count, temperate environment.

Ports of entry (seaports, airports, border crossings) are also pronounced patterns.

Most big cities with high rates also follow this pattern. Once we control for population density, few other big cities have the high rates one would expect from high density and high social interaction.

The following collects the factoids in support of the PRI hypothesis, as well as anomalies and contradictions where warranted.

Initial focus is on Italy, Switzerland…

Oliver Beige

I write about how technology shapes the world we live in.

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