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KNOWLEDGE CREATION AS A SQUARE DANCE ON THE HILBERT CUBE *
Author(s) -
Berliant Marcus,
Fujita Masahisa
Publication year - 2008
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/j.1468-2354.2008.00512.x
Subject(s) - production (economics) , population , externality , square (algebra) , set (abstract data type) , group (periodic table) , mathematical economics , process (computing) , mathematics , economics , microeconomics , computer science , physics , geometry , sociology , demography , quantum mechanics , programming language , operating system
This article presents a micromodel of knowledge creation through the interactions among a group of people. The model features myopic agents in a pure externality model of interaction. Surprisingly, for a large set of initial conditions we find that the equilibrium process of knowledge creation converges to the most productive state, where the population splits into smaller groups of optimal size; close interaction takes place within each group only. This optimal size is larger as heterogeneity of knowledge is more important in the knowledge production process. Equilibrium paths are found analytically; they are a discontinuous function of initial heterogeneity.