1. Empirical Observations Inertia Disruptive World of Clouds 1.4 Inertial Frame of Reference Salon: Cloud vis-`a-vis Clock Preston S. Fan School of Management, New York Institute of Technology April, 2014 Preston S. Fan 1.4 Inertial Frame of Reference 2. Empirical Observations Inertia Disruptive World of Clouds Table of Contents 1 Empirical Observations Lorentz Force Le Chateliers principle Samuelsons Correspondence Principle 2 Inertia The Universe of Clocks 3 Disruptive World of Clouds Statistical Implication Preston S. Fan 1.4 Inertial Frame of Reference 3. Empirical Observations Inertia Disruptive World of Clouds Lorentz Force Observed in electromagnetism, Lorentz force acts as a resistance to any wire loop moving through a magnetic eld. Crucial dierence: Ampere force does work on moving charges, but Lorentz force never does work. Preston S. Fan 1.4 Inertial Frame of Reference 4. Empirical Observations Inertia Disruptive World of Clouds Lorentz Force Much ado with nothing, but its result is similar to optimal control in economic science. F = q A t + (v A) (v ) A which can take the convenient Eulers equation: F = q X ( x A) + d dt X ( x A) as a necessary F.O.C. to economic optimization problem. Preston S. Fan 1.4 Inertial Frame of Reference 5. Empirical Observations Inertia Disruptive World of Clouds Le Chateliers principle Le Chateliers principle could be be used to predict the eect of a change in conditions on a chemical equilibrium qualitatively. Under certain conditions, a balanced system struggles to keep the initial balance (equilibrium). The (discrete) movement of equilibrium is predictable. Preston S. Fan 1.4 Inertial Frame of Reference 6. Empirical Observations Inertia Disruptive World of Clouds Le Chateliers principle Comparative static version of pV = nRT Any change in status quo prompts an opposing reaction in the responding system. ex: buer solution (such as the blood), buer pairs such as H2CO3 NaHCO3, NaH2PO4 Na2HPO4; H2CO3 KHCO3, KH2PO4 K2HPO4 Preston S. Fan 1.4 Inertial Frame of Reference 7. Empirical Observations Inertia Disruptive World of Clouds Samuelsons Correspondence Principle Samuelsons Correspondence Principle secures asymptotic stability of an economic system, which has been a foundation of comparative statics in general equilibrium analysis. General Correspondence Principle (Locally) Any Robustly Stable equilibrium exhibits the Robust Law of Demand. (Globally) If a system is globally Robustly Stable then it has at most one equilibrium point and this is Robustly Stable. Preston S. Fan 1.4 Inertial Frame of Reference 8. Empirical Observations Inertia Disruptive World of Clouds The Universe of Clocks Inertia Resistance to new changes Adaptive (disruptive?) Preston S. Fan 1.4 Inertial Frame of Reference 9. Empirical Observations Inertia Disruptive World of Clouds The Universe of Clocks Discussion on organizational changes or dynamics The universe of clouds Every clock becomes the cloud Unpredictable: the loss of security Unpredictable in direction Unpredictable in speed Preston S. Fan 1.4 Inertial Frame of Reference 10. Empirical Observations Inertia Disruptive World of Clouds Statistical Implication In Frequentist statistics, we face a trade-o between Power and Type I error. Questions: Is it for safe to be conservative against the changes? Resistance to new change is articial? Preston S. Fan 1.4 Inertial Frame of Reference 11. Empirical Observations Inertia Disruptive World of Clouds Statistical Implication A trial: Open any Form-10 of any rm, extract the numbers from its B/S or P/L in Excel. Compare among these numbers: = sumproduct( (left(your dataset, 1) = 1)) = sumproduct( (left(your dataset, 1) = 2)) ... = sumproduct( (left(your dataset, 1) = 9)) What do you discover? Preston S. Fan 1.4 Inertial Frame of Reference 12. Empirical Observations Inertia Disruptive World of Clouds Statistical Implication Newcomb (1881) noted the probability of a single number N being the rst digit of a number was equal to log10(N + 1) log10(N), rediscovered by Benford (1938). Questions: Resistance to new change is a behavioral pattern of the data per se? Herding eects? Preston S. Fan 1.4 Inertial Frame of Reference 13. Relevant Readings John Stachurski Economic Dynamics: Theory and Computation MIT Press. 2009. Gandolfo, Giancarlo Economic Dynamics Springer-Verlag Berlin Heidelberg. 2009. Preston S. Fan 1.4 Inertial Frame of Reference