Why youth hostel showers are like the stock market
February 11, 2008Diversity keeps you warm. At least that is true while you're having a shower in youth hostels. If you like, this sums up the research project just published by scientists from the Universities of Fribourg and Bonn. Their result is not as trivial as it sounds. Ultimately it shows that heterogeneity provides stability, whether this is in a shower, in power grids or even on the stock market.
Having a shower in a youth hostel can be risky when there is not enough hot water for everybody. If only one visitor turns up the hot tap during the early morning shower, everyone else is threatened by an icy gush of water. This unwanted form of hydrotherapy is particularly likely to happen when all the shower taps have the same possible settings, in other words if cold and hot water can be adjusted to exactly the same amount in all showers. But if the water taps in each shower have their individual quirks, the risk of extreme fluctuations is less.
At least that is what the Bonn economist Christina Matzke and her colleague Damien Challet, a physicist at the University of Fribourg, say. They modelled the temperature profile of showers in a youth hostel on the computer. 'All in all, heterogeneous taps offer advantages – they prevent the average shower temperature of all guests from suddenly dropping or rising,' Christina Matzke explains. 'From the perspective of the individual they also have disadvantages, as it’s more difficult for each person to set the right temperature.'
The problem sounds comical, but in principle it can be applied to all situations where people compete for a scarce resource, whether this is hot water, electricity or equities. One thing is always true, the more individualistic the behaviour of those involved in the market is, the more stable the whole system becomes. Put simply, the only reason why our electricity grid does not break down is that not all the inhabitants of Germany switch on the tumble drier at the same time. And if all shareholders made strictly rational decisions on their investments, there would probably be a lot more turbulence on the stock market.
The result is also significant from a theoretical point of view. 'We show what different results economic models can produce, depending on whether they are based on homogeneous or heterogeneous behaviour,' Christina Matzke emphasises. Accordingly, it is important to account for differences in individual behaviour when making forecasts. Although it sounds obvious, economists long ignored this insight. For decades their models were dominated by 'homo economicus', an imaginary standardised market investor who always made rational decisions rather than deciding according to individual criteria.
Source: University of Bonn
-
River crests in Memphis; states downstream prepare
May 10, 2011 |
not rated yet |
0
-
Thermophiles lurking in your basement
Apr 07, 2011 |
not rated yet |
0
-
IceCube: World's largest neutrino observatory completed at South Pole
Dec 20, 2010 |
5 / 5 (30) |
4
-
Japan high-tech toilet makers flush with success
Aug 25, 2010 |
3.9 / 5 (7) |
1
-
Survive the heat with planning - and a bottle of water
Aug 03, 2010 |
1 / 5 (1) |
0
-
Engineers build first sub-10-nm carbon nanotube transistor
Feb 01, 2012 |
4.9 / 5 (32) |
30
-
Something old, something new: Evolution and the structural divergence of duplicate genes
Jan 31, 2012 |
4.6 / 5 (7) |
1
-
The hidden nanoworld of ice crystals: Revealing the dynamic behavior of quasi-liquid layers
Jan 30, 2012 |
5 / 5 (4) |
1
-
Stock market network reveals investor clustering
Jan 27, 2012 |
3.9 / 5 (23) |
8
-
Of microchemistry and molecules: Electronic microfluidic device synthesizes biocompatible probes
Jan 26, 2012 |
5 / 5 (2) |
0
-
Bohr-Einstein debate: why did Bohr not simply say...
Feb 06, 2012
-
Best/Worst U.S. Presidents
Jan 31, 2012
- More from Physics Forums - History & Humanities
More news stories
Employers feel no love for unscrupulous practice of 'service sweethearting'
A new study led by two Florida State University marketing professors finds that some frontline service employees who are rewarded for hikes in customer loyalty and satisfaction also may engage in "service ...
Other Sciences / Economics & Business
Feb 10, 2012 |
3.3 / 5 (3) |
11
A frank discussion of the power law and linking correlation to causation
(PhysOrg.com) -- Michael Stumpf a mathematics professor at Imperial College in London, and Mason Porter a lecturer at Oxford have teamed together to write and publish a perspective piece in Science regarding the in ...
US workers are 'giving away the store,' costing firms billions
Nearly 70 percent of the nation's service employees give away free goods and services from hamburgers to cable TV costing companies billions of dollars a year, according to a groundbreaking study.
Other Sciences / Economics & Business
Feb 09, 2012 |
3.5 / 5 (4) |
10
New insights into how to correct false knowledge
The abundance of false information available on the Internet, in movies and on TV has created a big challenge for educators.
Other Sciences / Social Sciences
Feb 07, 2012 |
4.9 / 5 (7) |
9
|
Neanderthal demise due to many influences, including cultural changes: study
As an ice age crept upon them thousands of years ago, Neanderthals and modern human ancestors expanded their territory ranges across Asia and Europe to adapt to the changing environment.
Other Sciences / Archaeology & Fossils
Feb 07, 2012 |
4.4 / 5 (5) |
8
|
Scientists discover molecular secrets of 2,000-year-old Chinese herbal remedy
For roughly two thousand years, Chinese herbalists have treated Malaria using a root extract, commonly known as Chang Shan, from a type of hydrangea that grows in Tibet and Nepal. More recent studies suggest that halofuginone, ...
New method to examine batteries -- MRI from the inside
There is an ever-increasing need for advanced batteries for portable electronics, such as phones, cameras, and music players, but also to power electric vehicles and to facilitate the distribution and storage of energy derived ...
Lab study raises questions over nano-particle impact
Tests involving chickens have raised questions about the impact on health from engineered nano-particles, the ultra-fine grains commonly used in drugs and processed foods, scientists said on Sunday.
A mitosis mystery solved: How chromosomes align perfectly in a dividing cell
Although the process of mitotic cell division has been studied intensely for more than 50 years, Whitehead Institute researchers have only now solved the mystery of how cells correctly align their chromosomes during symmetric ...
Starve a virus, feed a cure? Findings show how some cells protect themselves against HIV
A protein that protects some of our immune cells from the most common and virulent form of HIV works by starving the virus of the molecular building blocks that it needs to replicate, according to research published online ...
Researchers find extensive RNA editing in human transcriptome
In a new study published online in Nature Biotechnology, researchers from BGI, the world's largest genomics organization, reported the evidence of extensive RNA editing in a human cell line by analysis of RNA-seq data, demons ...
Feb 11, 2008
Rank: not rated yet
Rationality *is* the act of an individual "deciding according to individual criteria". It is, at its simplest, the choice to focus and to think, which is to say, the choice to use one's mind on a conscious, purposive level.
Rationality is not, nor has it ever been, a guarantor of accuracy.
Varied outcomes will always be the norm even among a controlled group of mentally focused individuals thanks to varied knowledge contexts -- different IQs, time constraints, education, innocent mistakes, access to information, unique but equally valid goals, etc.
(This is, of course, leaving aside people who outright choose *not* to think, but that's a different issue. This article points to context as the factor, not faith.)
Here, rationality is once again treated in a Platonic way, as if true "rationality" is only possible to some imaginary ghost in outer space, an ideal being, a collective and infallible consciousness. But the concept "rationality" was invented to describe *human* thinking, not ghost thinking. It is and always has been an *individual* affair.
Sigh... I so miss the days when Aristotle and logic were still a part of college curricula.