Talk:Collapse of Complex Societies

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Marginal Complexity and Marginal Knowledge

Marginal gains in technical knowledge tend to chase after increasingly subtle details. Subtle details, which make small adjustments in the higher-order terms of the Taylor Series, are more likely to contain undetected errors. When highly competitive players try to find a marginal arbitrage advantage by exploiting the subtle differences between the standard model and slightly more sophisticated one, any undetected errors in modeling the subtleties can become amplified. This is perhaps most apparent in high-speed computer trading in financial instruments. Large trades triggered by tiny fluctuations in price can produce bewildering instabilities in the operation of a market. From tulip bulbs to credit default swaps, we've seen examples of these instabilities wreak havoc in financial markets. The same dynamics turn up in the mathematics of other systems, where too much energy is focused on small details whose dynamics are not well understood, well-modeled, or well-regulated. Moulton 14:03, 14 January 2011 (UTC)