Solving a puzzle, sorting a list. Pokes: breaking up the puzzle, adding out-of-order elements to the list.
Adoption. Pokes: CPS.
Finding a quality/trustworthy brand. Pokes: degradation in quality, changing preferences.
This exercise became much easier once I shifted my mindset. At first, I was picking a theme, with all the relevant details, then trying to find some way of justifying it as a stable equilibrium. What about being hungry? You start with a plate full of food. Then you eat it. But what if you don’t eat all the food? And then you wash the plate, and you might fill it full of food tomorrow. But then again, it feels sort of like once you’re full and not eating anymore, you’re sort of “stable” for that meal. But then again....
What helped was to realize that I was in charge of determining what is “inside” and “outside” the system. Instead of somehow arguing about what “counts as stable” or trying to pare down details, I could instead choose to define the system by building it up from its simplest elements, only including elements that I wanted to be relevant. By defining the activities of food preparation and digestion as “outside” the system and existing food as “inside” the system, eating lunch arrives at a stable equilibrium where plates are empty and bellies are full.
By changing what counts as “outside” and “inside,” we can get a different equilibrium. Our purposes determine which model is more useful. If I am thinking about running a restaurant, then I try to keep a stock of food always available in a dynamic equilibrium. If I am thinking about eating a picnic, then I don’t want to carry back a bunch of half-eaten food and am aiming for the stable equilibrium where it’s all been eaten.
The resulting model is relatively low-fidelity, but exhibits the properties of interest, is easy to think about, and can always be complexified if necessary. I think it’s probably a useful mental habit to cultivate. Instead of working with the most complex model you can manage to manipulate, use the simplest model that can produce useful results.
Good insights. The inside/outside assignment becomes especially important when we have have multiple processes which equilibrate at different timescales—e.g. a commodity price may have both a short-term equilibrium (which just balances near-term supply and demand) and a long-term equilibrium (in which new buyers/sellers start businesses/shut down businesses in response to prices). In that situation, we explicitly declare the long-term changes to be “outside” (aka “exogenous”) when analyzing the short-term equilibrium.
A fire burning out. Pokes: adding fuel or oxygen.
Solving a puzzle, sorting a list. Pokes: breaking up the puzzle, adding out-of-order elements to the list.
Adoption. Pokes: CPS.
Finding a quality/trustworthy brand. Pokes: degradation in quality, changing preferences.
This exercise became much easier once I shifted my mindset. At first, I was picking a theme, with all the relevant details, then trying to find some way of justifying it as a stable equilibrium. What about being hungry? You start with a plate full of food. Then you eat it. But what if you don’t eat all the food? And then you wash the plate, and you might fill it full of food tomorrow. But then again, it feels sort of like once you’re full and not eating anymore, you’re sort of “stable” for that meal. But then again....
What helped was to realize that I was in charge of determining what is “inside” and “outside” the system. Instead of somehow arguing about what “counts as stable” or trying to pare down details, I could instead choose to define the system by building it up from its simplest elements, only including elements that I wanted to be relevant. By defining the activities of food preparation and digestion as “outside” the system and existing food as “inside” the system, eating lunch arrives at a stable equilibrium where plates are empty and bellies are full.
By changing what counts as “outside” and “inside,” we can get a different equilibrium. Our purposes determine which model is more useful. If I am thinking about running a restaurant, then I try to keep a stock of food always available in a dynamic equilibrium. If I am thinking about eating a picnic, then I don’t want to carry back a bunch of half-eaten food and am aiming for the stable equilibrium where it’s all been eaten.
The resulting model is relatively low-fidelity, but exhibits the properties of interest, is easy to think about, and can always be complexified if necessary. I think it’s probably a useful mental habit to cultivate. Instead of working with the most complex model you can manage to manipulate, use the simplest model that can produce useful results.
Good insights. The inside/outside assignment becomes especially important when we have have multiple processes which equilibrate at different timescales—e.g. a commodity price may have both a short-term equilibrium (which just balances near-term supply and demand) and a long-term equilibrium (in which new buyers/sellers start businesses/shut down businesses in response to prices). In that situation, we explicitly declare the long-term changes to be “outside” (aka “exogenous”) when analyzing the short-term equilibrium.