A FUNDAMENTAL SYSTEM HYPOTHESIS RELATING RESOURCES, RISK, COMPLEXITY AND EXPECTED OUTPUT IN AGENT-DIRECTED SYSTEMS
Date
1997-12-01
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Abstract
A working hypothesis is presented and justified, called the Fundamental
Systems Hypothesis. It relates expected net output value, complexity, risk
and resources, and governs all agent-directed systems. The general veracity
of this Hypothesis appears such that it could be considered a Fundamental Law
of Systems. The risk measure is either conventional standard deviation risk
or mean deviation risk. There are two risk parameters: positive and negative
risk. There are two complexity parameters: monitoring or checking complexity,
and resource scheduling & utilization complexity. Complexity is defined as a
specification length after Gell-Mann. Both complexity parameters measure
complexity in the system's environment-coping procedure that monitors an often
close-to-random time function representing the unfolding environment. The
Hypothesis is expressed as a mathematical relationship that reduces to
numerical values for specific system circumstances. The established
Markowitz-Sharpe-Lintner relationship between return, capital resources and
risk for the subclass of financial systems is inherent in the Hypothesis. The
Hypothesis can be subjected to experimental test.
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Computer Science