Can Entropy Serve as a Proxy for Competition Levels in Economic Systems?

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The discussion explores whether entropy can serve as a measure of competition levels in economic systems. Participants debate the relationship between maximum competition and maximum entropy, with some arguing that both lead to an even distribution of resources among agents. However, others point out that competition has rules and dynamics that entropy does not account for, questioning the validity of equating the two concepts. The conversation highlights the lack of a precise definition for "level of competition," complicating the analysis. Ultimately, the thread concludes without a definitive answer, emphasizing the need for clearer definitions in economic discussions.
julesh
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Is there any particular reason why entropy could not be a measure of or proxy for the level of competition within a system?
 
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I am not sure what you mean. Can you provide an illustrative example showing how entropy might be used "as a measure of or proxy for" the level of competition in the system?
 
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Take a system of competitive or cooperative agents (human, biological, molecular or atomic). Let's say they are competing for energy (or money, being that money is a proxy for energy). The state of maximum competition is the same as the state of maximum entropy. Can entropy therefore be treated as being a measure of or proxy for the level of competition in a system?
 
When you say,
julesh said:
The state of maximum competition is the same as the state of maximum entropy.
you are begging the question.
 
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Begging the question or not, maximum competition and maximum entropy both result in the same situation of complete dispersal of energy (or money) throughout all agents in the systems.
 
I don't think your economics are correct. As for your physics, do you know the definition of entropy?
 
julesh said:
Summary:: Is there any particular reason why entropy could not be a measure of or proxy for the level of competition within a system?

Is there any particular reason why entropy could not be a measure of or proxy for the level of competition within a system?
This doesn't make a lot of sense to compare: competition has rules, entropy does not.
 
julesh said:
Begging the question or not, maximum competition and maximum entropy both result in the same situation of complete dispersal of energy (or money) throughout all agents in the systems.
Not sure I follow. How does maximum competition lead to maximum dispersal?

If both Eddie Oilers and Toronto Leafs were at max competition, the Stanley cup would not be maximally distributed between them.
 
A bird has wings and flies.
An airplane has wings and flies.
Therefore a bird is an airplane.
 
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  • #10
Simple economics. In a perfect market place there is maximum competition. No agents are cooperating. In such a situation, then the outcome is that through competition between the agents money becomes evenly dispersed throughout the system. Why is that not the equivalent of a state of maximum entropy? Boltzman's maths would predict the same result in both cases.
 
  • #11
julesh said:
Boltzman's maths would predict the same result in both cases.

Can you show this?

I am beginning to doubt that you are asking a question and concluding you are pushing your own personal theory.
 
  • #12
julesh said:
...through competition between the agents money becomes evenly dispersed throughout the system. ..
How does that jive with post 8?

If one agent has excellent skills compared to the others, the resources will not end up evenly dispersed.
 
  • #14
No reason for competition to have rules. Don't think of sport. Think of multiple agents (as in economic agents or organisms) in a system all competing - independently and simultaneously.
 
  • #15
DaveC426913 said:
How does that jive with post 8?

If one agent has excellent skills compared to the others, the resources will not end up evenly dispersed.
Indeed. But in perfect competition, assume all agents are the same.
 
  • #16
How can the particles in a point-particle ideal gas "compete" when they don't even interact in any way? Still they tend to distribute to constant density in a container, as the 2nd law of thermodynamics requires.
 
  • #17
Vanadium 50 said:
...concluding you are pushing your own personal theory.
That pretty much applies to all of economics.
 
  • #18
julesh said:
Indeed. But in perfect competition, assume all agents are the same.
If we have to add such an unrealistic and unilateral condition, then what value does the thesis provide?

It's kind of like saying "If there are ten students in the playground and ten balls, and students all run the same speed, so they each can grab only a single ball, then we have demonstrated ideal dispersion."

It's s truism - you're forcing it to be true.

And then having forced it, you're comparing it to something only superficially similar. See kuruman's post 9 example of birds and planes both having wings.

I'm not saying it's wrong; I'm simply not seeing what insight you see being gained.
 
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  • #19
julesh said:
Is there any particular reason why entropy could not be a measure of or proxy for the level of competition within a system?
Entropy has a precise mathematical definition: it is ##K\ln\Omega##. There is no comparable definition for “level of competition”, and without that clarity about the terms being used it is difficult to have a useful discussion.

This thread is closed. As with all thread closures, anyone can PM me or any of the other mentors to ask that it be reopened if there is something more to say.
 
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