A FUNDAMENTAL SYSTEMS HYPOTHESIS RELATING RESOURCES, RISK,COMPLEXITY AND EXPECTED OUTPUT VALUE
Date
1998-06-01
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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 human-agent-directed systems. The
general veracity of this Hypothesis appears such that it could be considered
a Fundamental Law of Systems. The risk measure can be 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-sharing complexity.
Monitoring complexity is defined as a specification length, and measures
complexity in the system's environment-coping procedure that monitors a time
function representing the unfolding environment. Resource-sharing complexity
measures the execution time of a complex resource-sharing procedure. The
Hypothesis is expressed as a mathematical relationship that reduces to
numerical values for specific system circumstances. It also quantifies real
economic losses, and gains, associated with system risk. 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