A FUNDAMENTAL SYSTEM HYPOTHESIS RELATING RESOURCES, RISK, COMPLEXITY AND EXPECTED OUTPUT IN AGENT-DIRECTED SYSTEMS

Date
1997-12-01
Journal Title
Journal ISSN
Volume Title
Publisher
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.
Description
Keywords
Computer Science
Citation