Why Most Things Fail: Evolution, Extinction and Economics
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Failure is the most fundamental feature of biological, social and economic systems. Just as species fail—and become extinct—so do companies, brands and public policies. And while failure may be hard to handle, understanding the pervasive nature of failure in the world of human societies and economies is essential for those looking to succeed.
Linking economic models with models of biological evolution, Why Most Things Fail identifies the subtle patterns that comprise the apparent disorder of failure and analyzes why failure arises. Throughout the book, author Paul Ormerod exposes the flaws in some of today's most basic economic assumptions, and examines how professionals in both business and government can help their organizations survive and thrive in a world that has become too complex. Along the way, Ormerod discusses how the Iron Law of Failure applies to business and government, and reveals how you can achieve optimal social and economic outcomes by properly adapting to a world characterized by constant change, evolution and disequilibrium.
Filled with in-depth insight, expert advice and illustrative examples, Why Most Things Fail will show you why failure is so common and what you can do to become one of the few who succeed.
they are very good, but not too good, at catching hares, while hares are skilled, but not too skilled, at avoiding the fate of being the dish of the day. But each without the other would be in danger of becoming extinct. Lynx need the hares to eat, while, without their natural predator, the hare population would grow without constraint, and as a consequence they would run the risk of eating so much of their own food sources that these, in turn, fell below the minimum level of population needed to
There is a large literature in biology which analyzes the process of evolution at the very basic level of the gene. As early as 1927, for example, the British biologist J. B. S. Haldane was developing mathematical formulae to help model the processes involved and the effects of reproduction and selection on the fitness of a population. A Scot educated at Eton and Oxford, Haldane, in his major work, The Causes of Evolution, placed natural selection on an even firmer scientific basis by explaining
fixed costs involving premises and staff which are simply too high, or, a frequent cause of failure, ignoring the importance of cash flow. These weed out very quickly those least adapted to survive. Soon, however, the value of more experience falls to zero. No matter how long the firm has survived, beyond the initial danger period the probability of failure in the immediate year ahead is virtually the same. Perhaps more surprisingly, there seems to be very little connection between the size of a
shock model in the context of social and economic systems by introducing variants of the model. One way of doing this is to let the agents be connected rather than operate purely in isolation from each other. We cannot, of course, make the network of connections too dense, for then we change the model from being one in which external shocks predominate to one in which the internal connections are mainly responsible for extinctions. But we can, for example, let the extinction of any given agent
factors. So, for example, we may try to account for variations in crime rates or unemployment, say, across localities at a point in time by correlating them with a set of socio-economic indicators. Crime, for example, might be held to vary with the proportion of families in poverty, or the number of single-parent families, or the levels of policing, or the sentencing policy of the criminal justice system. Such studies proliferate throughout the social sciences, but their quality varies