Experience Curves » behavioral economics

Learning from Cumulative Volume?

Don — Sun, 28 Feb 2010 04:39:33 +0000

If the result of repeated activities by mankind always results in learning, what is it that causes mankind to adopt a new learned procedure? Why does it always work no matter what the activity is? And why does it affect cost of manufacture differently for different products?

The post “The Geometry of Experience Curves” in this blog shows that the answer is: “That Men minimize their Time per unit of dimension”. Thus providing the incentive (less time spent by men) and the reason (geometry difference) for each product being different.

You tube

Don — Fri, 19 Feb 2010 22:24:01 +0000

The geometry of experience curves can be seen on youtube.

http://www.youtube.com/watch?v=3EW1DnJg1qY

Q:What Law of Nature Determines Price and Volume etc.

Don — Mon, 09 Nov 2009 17:44:13 +0000

A: For an Economy, like say the U.S. where we have variables Employed Men, Price,Volume,Wages,Investment,Scale of Operation, Production Process Mean Dimensions of Radius R with Number of space dimensions being used = m, Dollars, A Gross National Product, Specific Products and the change in time of these variables then:

For a change in Production of a Product with time the Behavior of Men is to Minimize their time/Per unit of Volume of the product, i.e. that ratio (dMen/dRadius with time)=0.

Using reduced values, or indexed values of these variables based on a given year for GNP, Price, Volume, etc. and the Fact that Dollars=Price*Volume=Wages*Men, and Volume=Radius^m gives a Slope for the Experienc Curve=(1/m-1)*(1-Exp(-k*t)) wherE k=growth rate constant for the product and t=time (usually years) .

Because “All Men involved minimize their time per unit of space dimension, with time”. Thus this Law of Nature is claimed as Garnett’s Minimization Law

(more)

Inherent in the foregoing is also the fact that Investment=Scale^(1/m).

Garnett’s Minimization Law of Human Behavior

Don — Tue, 25 Aug 2009 04:16:19 +0000

In the world of Supply and Demand the money that one group of people are willing to spend for something is equal to the amount of Money another group of people are willing to provide (sell) that something. The something can be anything, either goods (a product) or services. Money is identical to the time of Employed men times their Wage rate as that is exactly what one can buy with money. The production of that something in a physical facility has dimensons, like the Radius of a spherical tank brewing beer, and the quantity of beer or its Volume is proportional to the Radius raised to the power of the number of dimensions. In this case V=R^(N)=R^(3), since the number of dimensions is 3. In general, the economy is evolving, that is, it is a function of Time. The rate of change with time for the variable, say Employed is dE/dT, and Radius is dR/dT. The behavior of people when it comes time to change supply and demand is defined as Garnett’s Minimization Law:

“People minimize their time per unit of dimension, namely d((dE/dt) / (dR/dT))/dT = zero = 0 .

The result is that the Log(Money)=(1/N)*Log(Volume). Also,

Log(Price)=(1/N-1)*Log(Volume)

and other relationships that can be worked out from Money=Price*Volume=Wages*Employed=Wealth+Costs,

and the fact that demand is frequently exponential with time.

Inflation and Real Growth

Don — Sat, 17 Jan 2009 00:02:40 +0000

The post titled “Money” shows the GNP or money=k*(employed)^4 and volume=k*(employed)^2.16 and

price=k*(employed)^1.84. In the context of these posts the number of dimensions of the production

facilities, m=2.16 and the price exponent is (4-m). Differenting by parts results is the fraction of the change

in GNP that is real growth is m/4 and the part that is inflation is (4-m)/4. The value of m therefore determines

the fraction that is inflation and real growth. The value of m determine the fraction that is real growth, namely;

m=1 results in 25% real growth,

m=2 results in 50% real growth

m=3 results in 75% real growth.

Obama’s and others “put people to work” with bail-out government money will not help the economy much if

the number of dimensions of those activities is low (e.g. a shovel in hand ditch digger) vs. high

(like building a petrochemical plant).

Power Point version “Geometry of Experience Curves”

Don — Thu, 01 Jan 2009 01:16:13 +0000

geometry81

Defines what an experience curve really is.