Economics of Collective Value
Final rept. 30 Sep 2010-31 Dec 2011
NEW ENGLAND COMPLEX SYSTEMS INST CAMBRIDGE MA
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Price and value are not synonymous, they are related concepts. Value is determined by desire of an individual for a good, price is determined by collective agreements on transactions to transfer that good. Such a shift between scales is at the heart of complex systems research, which quantifies the emergence of larger scale phenomena from smaller scale interactions. Attempts have been made toward formalizing theories of price formation, but none of them so far was able to reproduce historical economic data in a quantitative way.
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