Robert Mundell, an eminent economist and Nobel laureate, made significant contributions to our understanding of optimal currency areas. His groundbreaking work on this topic has had far-reaching implications, particularly in the context of the Eurozone and the stability of monetary unions. This blog post delves into the context behind Mundell’s arguments and explores the ramifications of his theories, both for public and private currencies.

In today’s interconnected global economy, supply chain disruptions can have far-reaching consequences for businesses. From natural disasters to geopolitical events and unexpected market shifts, these disruptions can lead to significant financial losses and operational challenges. — To better understand and navigate these disruptions, the concept of Forrester Shocks, named after MIT professor and computing pioneer Jay Wright Forrester, has gained prominence. …

Bayesian belief propagation is a powerful concept used in machine learning and the social sciences to understand complex problems involving probabilistic inference in groups. It is particularly useful in heterogeneous networks, where the nodes and edges represent different types or characteristics. This article explains how Bayesian belief propagation works, and discusses its role in the emergence of filter bubbles.

In the words of internet pioneer Marc Andreesen, software will inevitably eat the world. “The world" in this case is the world of physical products, and “software" is any kind of digital representation that can emulate or replace this product. A very prominent example of this prediction is the replacement…

Thinking about decentralized systems means thinking about how an organization can agree upon what it holds to be true and how this relates to the actual ground truth. — Centralized “truth” A “single source of truth” is a concept from information science, but it’s so universal that it can be applied to a whole variety of scenarios and organizations. It means that whenever participants disagree about the state of the world, or a particular aspect of it, a designated participant gets…

“Decentralization" is a popular term used to bracket a set of interrelated technologies including blockchain, crypto tokens, NFTs. It’s also a fuzzy term that has been used in subtly different ways in different disciplines throughout history, so the question “what is a decentralized system", or, more to the point, “is…

A few notes on coordination, adaptation, and the role of institutions. — “Both the organization theorist Chester Barnard and the economist Friedrich Hayek took adaptation to be the main purpose of economic organization, but with differences.” — Oliver Williamson Nobel Lecture Coordination has become an increasingly important C-word in business and economics, based on the emerging realization that not all economic activity…

In 1991, social scientist and Nobel laureate Herbert Simon invited us to participate in a somewhat alien-sounding thought experiment. Imagine an extraterrestrial observing human behavior with a special telescope. Instead of showing us as we are, the telescope allows the observer to recognize social structures: organizations appear as green blobs, interactions between organizations as a network of red lines between the blobs.

In 1956, the fledgling Graduate School of Industrial Administration (GSIA) at Carnegie Institute of Technology received an IBM 650 computer to use jointly with the engineering and the mathematics departments. In the coming years, this acquisition led to a number of research activities which not only produced multiple economics Nobel Prizes and Turing Awards, but also two very distinct, somewhat incompatible economic frameworks: bounded rationality and rational expectations.