Chapter 8: Implications for Everyday Systems

Section 8: Financial Systems

Laws of human behavior

Over the past century there have been a fair number of quantitative laws proposed for features of human behavior. Some are presumably a direct reflection of human biological construction. Thus for example, Weber's law that the perceived strength of a stimulus tends to vary logarithmically with its actual strength seems likely to be related to the electrochemistry of nerve cells. Of laws for more complicated cognitive or social phenomena the vast majority are statistical in nature. And of those that withstand scrutiny, most in my experience turn out to be transformed versions of statements that some quantity or another can be approximated by perfect randomness. Gaussian distributions typically arise when measurements involve sums of random quantities; other common distributions are obtained from products or other simple combinations of random quantities, or from the results of simple processes based on random quantities. Exponential distributions (as seen, for example, in learning curves) and power-law distributions (as in Zipf's law below) are both, for example, very easy to obtain. (Note that particularly in economics there are also various laws derived from calculus and game theory that are viewed as being quite successful, and are not fundamentally statistical.)

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From Stephen Wolfram: A New Kind of Science [citation]