Showing posts with label game theory. Show all posts
Showing posts with label game theory. Show all posts

30 October 2020

Data Science: Data Strategy (Part I: Big Data vs. Business Strategies)

Data Science

A strategy, independently on whether applied to organizations, chess, and other situations, allows identifying the moves having the most promising results from a range of possible moves that can change as one progresses into the game. Typically, the moves compete for same or similar resources, each move having at the respective time a potential value expressed in quantitative and/or qualitative terms, while the values are dependent on the information available about one’s and partners’ positions into the game. Therefore, a strategy is dependent on the decision-making processes in place, the information available about own business, respective the concurrence, as well about the game.

Big data is not about a technology but an umbrella term for multiple technologies that support in handling data with high volume, veracity, velocity or variety. The technologies attempt helping organizations in harnessing what is known as Big data (data having the before mentioned characteristics), for example by allowing answering to business questions, gaining insight into the business or market, improving decision-making. Through this Big data helps delivering value to businesses, at least in theory.

Big-data technologies can harness all data of an organization though this doesn’t imply that all data can provide value, especially when considered in respect to the investments made. Data bring value when they have the potential of uncovering hidden trends or (special) patterns of behavior, when they can be associated in new meaningful ways. Data that don’t reflect such characteristics are less susceptible of bringing value for an organization no matter how much one tries to process the respective data. However, looking at the data through multiple techniques can help organization get a better understanding of the data, though here is more about the processes of attempting understanding the data than the potential associated directly with the data.

Through active effort in understanding the data one becomes aware of the impact the quality of data have on business decisions, on how the business and processes are reflected in its data, how data can be used to control processes and focus on what matters. These are aspects that can be corroborated with the use of simple BI capabilities and don’t necessarily require more complex capabilities or tools. Therefore allowing employees the time to analyze and play with the data, can in theory have a considerable impact on how data are harnessed within an organization.

If an organization’s decision-making processes is dependent on actual data and insight (e.g. stock market) then the organization is more likely to profit from it. In opposition, organizations whose decision-making processes hand handle hours, days or months of latency in their data, then more likely the technologies will bring little value. Probably can be found similar examples for veracity, variety or similar characteristics consider under Big data.

The Big data technologies can make a difference especially when the extreme aspects of their characteristics can be harnessed. One talks about potential use which is different than the actual use. The use of technologies doesn’t equate with results, as knowledge about the tools and the business is mandatory to harness the respective tools. For example, insight doesn’t necessarily imply improved decision-making because it relies on people’s understanding about the business, about the numbers and models used.

That’s maybe one of the reasons why organization fail in deriving value from Big data. It’s great that companies invest in their Big data, Analytics/BI infrastructures, though without working actively in integrating the new insights/knowledge and upgrading people’s skillset, the effects will be under expectations. Investing in employees’ skillset is maybe one of the important decisions an organization can make as part of its strategy.

Note:
Written as answer to a Medium post on Big data and business strategies. 

18 December 2014

🕸Systems Engineering: Equilibrium (Just the Quotes)

"We cannot prevent equilibrium from producing its effects. We may brave human laws, but we cannot resist natural ones." (Jules Verne, "Twenty Thousand Leagues Under the Sea", 1870)

"Every situation is an equilibrium of forces; every life is a struggle between opposing forces working within the limits of a certain equilibrium." (Henri-Frédéric Amiel, "Amiel's Journal", 1885)

"Plasticity, then, in the wide sense of the word, means the possession of a structure weak enough to yield to an influence, but strong enough not to yield all at once. Each relatively stable phase of equilibrium in such a structure is marked by what we may call a new set of habits." (William James, "The Laws of Habit", 1887)

"Every change of one of the factors of an equilibrium occasions a rearrangement of the system in such a direction that the factor in question experiences a change in a sense opposite to the original change." (Henri L Le Chatelier, "Recherches Experimentales et Theoriques sur les Equilibres Chimiques" ["Experimental and Theoretical Research on Chemical Equilibria"], Annales des Mines 8, 1888)

"In every symmetrical system every deformation that tends to destroy the symmetry is complemented by an equal and opposite deformation that tends to restore it. […] One condition, therefore, though not an absolutely sufficient one, that a maximum or minimum of work corresponds to the form of equilibrium, is thus applied by symmetry." (Ernst Mach, "The Science of Mechanics: A Critical and Historical Account of Its Development", 1893)

"We rise from the conception of form to an understanding of the forces which gave rise to it [...] in the representation of form we see a diagram of forces in equilibrium, and in the comparison of kindred forms we discern the magnitude and the direction of the forces which have sufficed to convert the one form into the other." (D'Arcy Wentworth Thompson, "On Growth and Form" Vol. 2, 1917)

"What in the whole denotes a causal equilibrium process, appears for the part as a teleological event." (Ludwig von Bertalanffy, 1929)

"True equilibria can occur only in closed systems and that, in open systems, disequilibria called ‘steady states’, or ‘flow equilibria’ are the predominant and characteristic feature. According to the second law of thermodynamics a closed system must eventually attain a time-independent equilibrium state, with maximum entropy and minimum free energy. An open system may, under certain conditions, attain a time-independent state where the system remains constant as a whole and in its phases, though there is a continuous flow of component materials. This is called a steady state. Steady states are irreversible as a whole. […] A closed system in equilibrium does not need energy for its preservation, nor can energy be obtained from it. In order to perform work, a system must be in disequilibrium, tending toward equilibrium and maintaining a steady state, Therefore the character of an open system is the necessary condition for the continuous working capacity of the organism." (Ludwig on Bertalanffy, "Theoretische Biologie: Band 1: Allgemeine Theorie, Physikochemie, Aufbau und Entwicklung des Organismus", 1932)

"A state of equilibrium in a system does not mean, further, that the system is without tension. Systems can, on the contrary, also come to equilibrium in a state of tension (e.g., a spring under tension or a container with gas under pressure).The occurrence of this sort of system, however, presupposes a certain firmness of boundaries and actual segregation of the system from its environment (both of these in a functional, not a spatial, sense). If the different parts of the system are insufficiently cohesive to withstand the forces working toward displacement (i.e., if the system shows insufficient internal firmness, if it is fluid), or if the system is not segregated from its environment by sufficiently firm walls but is open to its neighboring systems, stationary tensions cannot occur. Instead, there occurs a process in the direction of the forces, which encroaches upon the neighboring regions with diffusion of energy and which goes in the direction of an equilibrium at a lower level of tension in the total region. The presupposition for the existence of a stationary state of tension is thus a certain firmness of the system in question, whether this be its own inner firmness or the firmness of its walls." (Kurt Lewin, "A Dynamic Theory of Personality", 1935)

"The process moves in the direction of a state of equilibrium only for the system as a whole. Part processes may at the same time go on in opposed directions, a circumstance which is of the greatest significance for, for example, the theory of detour behavior. It is hence important to take the system whole which is dominant at the moment as basis." (Kurt Lewin, "A Dynamic Theory of Personality", 1935)

"One may generalize upon these processes in terms of group equilibrium. The group may be said to be in equilibrium when the interactions of its members fall into the customary pattern through which group activities are and have been organized. The pattern of interactions may undergo certain modifications without upsetting the group equilibrium, but abrupt and drastic changes destroy the equilibrium." (William F Whyte, "Street Corner Society", 1943)

"The behavior of two individuals, consisting of effort which results in output, is considered to be determined by a satisfaction function which depends on remuneration (receiving part of the output) and on the effort expended. The total output of the two individuals is not additive, that is, together they produce in general more than separately. Each individual behaves in a way which he considers will maximize his satisfaction function. Conditions are deduced for a certain relative equilibrium and for the stability of this equilibrium, i.e., conditions under which it will not pay the individual to decrease his efforts. In the absence of such conditions ‘exploitation’ occurs which may or may not lead to total parasitism." (Anatol Rapoport, "Mathematical theory of motivation interactions of two individuals," The Bulletin of Mathematical Biophysics 9, 1947)

"The study of the conditions for change begins appropriately with an analysis of the conditions for no change, that is, for the state of equilibrium." (Kurt Lewin, "Quasi-Stationary Social Equilibria and the Problem of Permanent Change", 1947)

"Now a system is said to be at equilibrium when it has no further tendency to change its properties." (Walter J Moore, "Physical chemistry", 1950)

"Physical irreversibility manifests itself in the fact that, whenever the system is in a state far removed from equilibrium, it is much more likely to move toward equilibrium, than in the opposite direction." (William Feller, "An Introduction To Probability Theory And Its Applications", 1950)

"Equilibrium requires that the whole of the structure, the form of its elements, and the means of interconnection be so combined that at the supports there will automatically be produced passive forces or reactions that are able to balance the forces acting upon the structures, including the force of its own weight."  (Eduardo Torroja, "Philosophy of Structure", 1951) 

"[…] there are three different but interconnected conceptions to be considered in every structure, and in every structural element involved: equilibrium, resistance, and stability." (Eduardo Torroja, "Philosophy of Structure" , 1951) 

"Every stable system has the property that if displaced from a state of equilibrium and released, the subsequent movement is so matched to the initial displacement that the system is brought back to the state of equilibrium. A variety of disturbances will therefore evoke a variety of matched reactions." (W Ross Ashby, "Design for a Brain: The Origin of Adaptive Behavior", 1952)

"The primary fact is that all isolated state-determined dynamic systems are selective: from whatever state they have initially, they go towards states of equilibrium. These states of equilibrium are always characterised, in their relation to the change-inducing laws of the system, by being exceptionally resistant." (W Ross Ashby, "Design for a Brain: The Origin of Adaptive Behavior", 1952)

"As shorthand, when the phenomena are suitably simple, words such as equilibrium and stability are of great value and convenience. Nevertheless, it should be always borne in mind that they are mere shorthand, and that the phenomena will not always have the simplicity that these words presuppose." (W Ross Ashby, "An Introduction to Cybernetics", 1956)

"Reversible processes are not, in fact, processes at all, they are sequences of states of equilibrium. The processes which we encounter in real life are always irreversible processes." (Arnold Sommerfeld, "Thermodynamics and Statistical Mechanics", Lectures on Theoretical - Physics Vol. V, 1956)

"The static stability of a system is defined by the initial tendency to return to equilibrium conditions following some disturbance from equilibrium. […] If the object has a tendency to continue in the direction of disturbance, negative static stability or static instability exists. […] If the object subject to disturbance has neither the tendency to return nor the tendency to continue in the displacement direction, neutral static stability exists." (Hugh H Hurt, "Aerodynamics for Naval Aviators", 1960)

"While static stability is concerned with the tendency of a displaced body to return to equilibrium, dynamic stability is concerned with the resulting motion with time. If an object is disturbed from equilibrium, the time history of the resulting motion indicates the dynamic stability of the system. In general, the system will demonstrate positive dynamic stability if the amplitude of the motion decreases with time." (Hugh H Hurt, "Aerodynamics for Naval Aviators", 1960)

"[The equilibrium model describes systems] which, in moving to an equilibrium point, typically lose organization, and then tend to hold that minimum level within relatively narrow conditions of disturbance." (Walter F Buckley, "Sociology and modern systems theory", 1967)

"A system is in equilibrium when the forces constituting it are arranged in such a way as to compensate each other, like the two weights pulling at the arms of a pair of scales." (Rudolf Arnheim, "Entropy and Art: An Essay on Disorder and Order", 1971) 

"When matter is becoming disturbed by non-equilibrium conditions it organizes itself, it wakes up. It happens that our world is a non-equilibrium system." (Ilya Prigogine, "Thermodynamics of Evolution", 1972) 

"In an isolated system, which cannot exchange energy and matter with the surroundings, this tendency is expressed in terms of a function of the macroscopic state of the system: the entropy." (Ilya Prigogine, "Thermodynamics of Evolution", 1972) 

"Chance is commonly viewed as a self-correcting process in which a deviation in one direction induces a deviation in the opposite direction to restore the equilibrium. In fact, deviations are not 'corrected' as a chance process unfolds, they are merely diluted." (Amos Tversky, "Judgment Under Uncertainty: Heuristics and Biases", 1974)

"In any system governed by a potential, and in which the system's behavior is determined by no more than four different factors, only seven qualitatively different types of discontinuity are possible. In other words, while there are an infinite number of ways for such a system to change continuously (staying at or near equilibrium), there are only seven structurally stable ways for it to change discontinuously (passing through non-equilibrium states)." (Alexander Woodcock & Monte Davis, "Catastrophe Theory", 1978)

"All environmental areas, from the primeval forest to the large city, can be regarded as ecosystems and investigated accordingly, most of the attention being given to the lasting existence and functioning or 'equilibrium' of these systems." (Wolfgang Haber, Universitas: A Quarterly German Review of the Arts and Sciences Vol.26 (2), 1984)


"If a system is in a state of equilibrium (a steady state), then all sub-systems must be in equilibrium. If all sub-systems are in a state of equilibrium, then the system must be in equilibrium." (Barry Clemson, "Cybernetics: A New Management Tool", 1984)

"When loops are present, the network is no longer singly connected and local propagation schemes will invariably run into trouble. [...] If we ignore the existence of loops and permit the nodes to continue communicating with each other as if the network were singly connected, messages may circulate indefinitely around the loops and process may not converges to a stable equilibrium. […] Such oscillations do not normally occur in probabilistic networks […] which tend to bring all messages to some stable equilibrium as time goes on. However, this asymptotic equilibrium is not coherent, in the sense that it does not represent the posterior probabilities of all nodes of the network." (Judea Pearl, "Probabilistic Reasoning in Intelligent Systems: Networks of Plausible Inference", 1988)

"Regarding stability, the state trajectories of a system tend to equilibrium. In the simplest case they converge to one point (or different points from different initial states), more commonly to one (or several, according to initial state) fixed point or limit cycle(s) or even torus(es) of characteristic equilibrial behaviour. All this is, in a rigorous sense, contingent upon describing a potential, as a special summation of the multitude of forces acting upon the state in question, and finding the fixed points, cycles, etc., to be minima of the potential function. It is often more convenient to use the equivalent jargon of 'attractors' so that the state of a system is 'attracted' to an equilibrial behaviour. In any case, once in equilibrial conditions, the system returns to its limit, equilibrial behaviour after small, arbitrary, and random perturbations." (Gordon Pask, "Different Kinds of Cybernetics", 1992)

"Systems, acting dynamically, produce (and incidentally, reproduce) their own boundaries, as structures which are complementary (necessarily so) to their motion and dynamics. They are liable, for all that, to instabilities chaos, as commonly interpreted of chaotic form, where nowadays, is remote from the random. Chaos is a peculiar situation in which the trajectories of a system, taken in the traditional sense, fail to converge as they approach their limit cycles or 'attractors' or 'equilibria'. Instead, they diverge, due to an increase, of indefinite magnitude, in amplification or gain.(Gordon Pask, "Different Kinds of Cybernetics", 1992)

"The model of competitive equilibrium which has been discussed so far is set in a timeless environment. People and companies all operate in a world in which there is no future and hence no uncertainty." (Paul Ormerod, "The Death of Economics", 1994)

"Self-organization refers to the spontaneous formation of patterns and pattern change in open, nonequilibrium systems. […] Self-organization provides a paradigm for behavior and cognition, as well as the structure and function of the nervous system. In contrast to a computer, which requires particular programs to produce particular results, the tendency for self-organization is intrinsic to natural systems under certain conditions." (J A Scott Kelso, "Dynamic Patterns : The Self-organization of Brain and Behavior", 1995)

"Contrary to what happens at equilibrium, or near equilibrium, systems far from equilibrium do not conform to any minimum principle that is valid for functions of free energy or entropy production." (Ilya Prigogine, "The End of Certainty: Time, Chaos, and the New Laws of Nature", 1996) 

"[…] self-organization is the spontaneous emergence of new structures and new forms of behavior in open systems far from equilibrium, characterized by internal feedback loops and described mathematically by nonlinear equations.” (Fritjof Capra, “The web of life: a new scientific understanding of living systems”, 1996)

"Complex systems operate under conditions far from equilibrium. Complex systems need a constant flow of energy to change, evolve and survive as complex entities. Equilibrium, symmetry and complete stability mean death. Just as the flow, of energy is necessary to fight entropy and maintain the complex structure of the system, society can only survive as a process. It is defined not by its origins or its goals, but by what it is doing." (Paul Cilliers,"Complexity and Postmodernism: Understanding Complex Systems", 1998)

"An equilibrium is not always an optimum; it might not even be good. This may be the most important discovery of game theory." (Ivar Ekeland, "Le meilleur des mondes possibles" ["The Best of All Possible Worlds"], 2000)

"Positive feedbacks, when unchecked, can produce runaways until the deviation from equilibrium is so large that other effects can be abruptly triggered and lead to ruptures and crashes." (Didier Sornette, "Why Stock Markets Crash - Critical Events in Complex Systems", 2003)

"The players in a game are said to be in strategic equilibrium (or simply equilibrium) when their play is mutually optimal: when the actions and plans of each player are rational in the given strategic environment - i. e., when each knows the actions and plans of the others." (Robert Aumann, "War and Peace", 2005)

"The second law of thermodynamics states that in an isolated system, entropy can only increase, not decrease. Such systems evolve to their state of maximum entropy, or thermodynamic equilibrium. Therefore, physical self-organizing systems cannot be isolated: they require a constant input of matter or energy with low entropy, getting rid of the internally generated entropy through the output of heat ('dissipation'). This allows them to produce ‘dissipative structures’ which maintain far from thermodynamic equilibrium. Life is a clear example of order far from thermodynamic equilibrium." (Carlos Gershenson, "Design and Control of Self-organizing Systems", 2007)

28 April 2006

🖍️Nassim N Taleb - Collected Quotes

"A mistake is not something to be determined after the fact, but in the light of the information until that point." (Nassim N Taleb, "Fooled by Randomness", 2001)

"Probability is not about the odds, but about the belief in the existence of an alternative outcome, cause, or motive." (Nassim N Taleb, "Fooled by Randomness", 2001)

"A Black Swan is a highly improbable event with three principal characteristics: It is unpredictable; it carries a massive impact; and, after the fact, we concoct an explanation that makes it appear less random, and more predictable, than it was. […] The Black Swan idea is based on the structure of randomness in empirical reality. [...] the Black Swan is what we leave out of simplification." (Nassim N Taleb, "The Black Swan" , 2007)

"Prediction, not narration, is the real test of our understanding of the world." (Nassim N Taleb, "The Black Swan", 2007)

"The inability to predict outliers implies the inability to predict the course of history.” (Nassim N Taleb, “The Black Swan”, 2007)

"While in theory randomness is an intrinsic property, in practice, randomness is incomplete information." (Nassim N Taleb, "The Black Swan", 2007)

"Complex systems are full of interdependencies - hard to detect - and nonlinear responses. […] Man-made complex systems tend to develop cascades and runaway chains of reactions that decrease, even eliminate, predictability and cause outsized events. So the modern world may be increasing in technological knowledge, but, paradoxically, it is making things a lot more unpredictable." (Nassim N Taleb, "Antifragile: Things that gain from disorder", 2012)

"Technology is the result of antifragility, exploited by risk-takers in the form of tinkering and trial and error, with nerd-driven design confined to the backstage." (Nassim N Taleb, "Antifragile: Things that gain from disorder", 2012)

"The higher the dimension, in other words, the higher the number of possible interactions, and the more disproportionally difficult it is to understand the macro from the micro, the general from the simple units. This disproportionate increase of computational demands is called the curse of dimensionality." (Nassim N Taleb, "Skin in the Game: Hidden Asymmetries in Daily Life", 2018)

"[…] whenever people make decisions after being supplied with the standard deviation number, they act as if it were the expected mean deviation." (Nassim N Taleb, "Statistical Consequences of Fat Tails: Real World Preasymptotics, Epistemology, and Applications" 2nd Ed., 2022)

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