window.dataLayer = window.dataLayer || []; function gtag(){dataLayer.push(arguments);} gtag('js', new Date()); gtag(‘config’, 'UA-735966-32’); Tumblr (3.0; @misentropy)https://notes.misentropy.com/<p>Endogenous refers to phenomena originating from <i>within</i> a system, as opposed to exogenous factors that arise externally. The term originates from systems theory and economics, where it distinguishes between internal dynamics (e.g., consumer behavior in a market) and external shocks (e.g., a natural disaster disrupting supply chains).</p><p>In its original domains, &ldquo;endogenous&rdquo; reframes analysis by prioritizing self-contained causality—how systems generate their own behavior through feedback loops, structural constraints, or embedded rules.</p><p><b>First Principles</b><br/><i>Self-Contained Causality</i>: System behavior emerges from internal interactions (e.g., price fluctuations driven by supply-demand dynamics, not external policy).</p><p><i>Feedback Dominance</i>: Endogenous processes often involve recursive relationships (e.g., viral growth in social networks).</p><p><i>Boundary Dependency:</i> What qualifies as endogenous depends on system definition (e.g., employee turnover is endogenous to a firm but exogenous to a department).</p><p><b>Implications</b><br/><i>Predictability:</i> Endogenous systems are more model-able (e.g., economic forecasts based on internal variables like interest rates).</p><p><i>Control Leverage:</i> Interventions targeting endogenous factors (e.g., incentivizing user engagement) yield higher ROI than battling external shocks.</p><p><i>Equilibrium Dynamics: </i>Endogenous stability (e.g., market clearing) can mask fragility to overlooked internal variables.</p><p><b>Applications</b><br/><i>Growth Strategies:</i> Prioritize product virality (endogenous) over paid acquisition (exogenous).</p><p><i>Churn Analysis:</i> Focus on onboarding flaws (endogenous) before blaming competition (exogenous).</p><p><i>Algorithm Design: </i>Train models on endogenous data patterns (e.g., user behavior sequences) vs. static snapshots.</p>https://notes.misentropy.com/post/788175599227322368https://notes.misentropy.com/post/788175599227322368Fri, 04 Jul 2025 23:00:25 +0200system thinkingproduct management<blockquote><p><i>State death is a phrase that I borrowed from the work of Tanisha Fazal, a professor [who specializes in] international relations at the University of Minnesota. State death is when a state no longer exists because it is annexed or conquered, and it ceases to be independent. This would mean Russia’s objective is not just to put in a new government, like in Scenarios 1 and 2, but to actually take over the entire country and make Ukraine part of Russia. This is exactly what Russia did with Crimea.</i></p></blockquote><p>// <a href="https://www.theatlantic.com/ideas/archive/2022/02/how-crisis-ukraine-will-end/622942" target="_blank">Source</a></p>https://notes.misentropy.com/post/680093415207288832https://notes.misentropy.com/post/680093415207288832Tue, 29 Mar 2022 23:00:22 +0200state deathukrainepolitical sciencegovernment<blockquote><p><i>The conventional view of evolution is that mutations happen at random. Maladaptive ones are then eliminated by competitive pressure while adaptive ones proliferate. The result, over long periods of time and assisted by populations sometimes being split up by external circumstances, is change which eventually crystallises into new and separate species.</i></p><p><i>That process does leave the door open to hybrids. The genomes of closely related species may remain sufficiently similar to produce viable offspring. But these genes often fit together less well than those of parents from the same species. As a consequence, even viable hybrids are frequently infertile (think mules) and are also at higher risk of developmental and other types of illnesses. In fact, infertility in male hybrids is so common that it has a name—Haldane’s rule. This sort of thing was enough to persuade most of Darwin’s 20th-century disciples that the need to avoid hybridisation was actually a driving force which caused natural selection to erect reproductive barriers between incipient species, and thus encouraged speciation.</i></p></blockquote><p>// <a href="https://www.economist.com/science-and-technology/2020/10/03/how-hybrids-have-upturned-evolutionary-theory" target="_blank">Source</a></p>https://notes.misentropy.com/post/645398582032318464https://notes.misentropy.com/post/645398582032318464Thu, 11 Mar 2021 23:00:51 +0100evolutiondarwinismmutationspeciesspeciationhaldane<blockquote><p><i>A lot of the book is based on the research of Daniel Kahneman and Amos Tversky, two Israeli psychologists who did their best-known research in the 1970s. They explored a number of persistent problems in human thinking, including the “law of small numbers”, which is a tendency of people to extract sweeping conclusions from very small samples of data. You can see why somebody who is interested in sport might pick up on this – because if a team in baseball or basketball wins three games in a row, it’s very hard for anyone to ignore the urge to conclude that the team is hot or on a roll, when, of course, it’s not actually that big a deal statistically, to win three games in a row. Even the worst team in the entire sport is capable of doing that on any three days. The same thing happens in financial markets. From a short streak, people will conclude the future is more knowable, and that it’s representative of how the investment is going to continue to perform. In fact, all it really is is a little burst of randomness and, all else being equal, there’s no reason to assume that it will persist. This is the kind of idea they explore over and over again, very beautifully in the book. Anybody can come away from reading it better equipped to spot these kinds of pitfalls in himself or herself.</i><br/></p></blockquote><p>// <a href="https://fivebooks.com/best-books/jason-zweig-on-personal-finance/" target="_blank">Source</a></p>https://notes.misentropy.com/post/645308086376071168https://notes.misentropy.com/post/645308086376071168Wed, 10 Mar 2021 23:02:28 +0100law of small numbersdataanecdotesanalysis<blockquote><p><i>Millennial techies are at home with all this. The older technophobic crowd tends to be hostile. So be it. “That most people still hate bitcoin isn’t a bad thing,” writes Dylan Grice of Calderwood Capital, an alternative-investment boutique, in a recent letter to clients. This is to say that it is difficult to make a lot of money buying an asset that everybody likes. And as with the Blitz, the infamy and outrage is part of the allure. Older visitors might grumble that the music played there was unremarkable or that the venue was a dump. It didn’t matter. The club acted as a focal point for like-minded people. That is an underrated virtue. Thomas Schelling, a Nobel prize-winning economist and game theorist, contended that people gravitate towards focal points without formally agreeing to do so. His insight extends to asset markets. Gold bars—or bitcoins—have value if enough people tacitly agree that they do.</i><br/></p></blockquote><p>// <a href="https://www.economist.com/finance-and-economics/2020/10/29/getting-down-with-the-cool-kids-on-bitcoin" target="_blank">Source</a></p>https://notes.misentropy.com/post/645217393757519873https://notes.misentropy.com/post/645217393757519873Tue, 09 Mar 2021 23:00:56 +0100thomas schellinggame theoryfocal point<blockquote><p><i>Search matters in the early stages of economic development, when ideas are abundant, businesses are capital-intensive and savings are scarce. The late 19th century was such a time. In New York, Fleming’s hunting-ground, most bonds were for railroad companies. In Britain, brewers, distillers and miners were also thirsty for capital. In 1886 Guinness, a century-old beer company, raised £6m in London. A few years later shares in the Broken Hill Proprietary Mining Company (<small>bhp</small>), which began trading in Australia, were owned and exchanged in London.</i></p><p><i>When search works well and capital runs to “where there is most to be made of it”, relevant information is quickly reflected in asset prices. The case for index investing rests on the idea that the stockmarket is, in this sense, broadly efficient. Prices are set by informed buying and selling by active and engaged investors. But as more money goes to index funds, the market might become less efficient. Whether it does rests in theory on the quality of investors being displaced. If they are “noisy” active managers, who buy and sell on gut feel, expect more efficiency, not less. If they are farsighted stockpickers, the quality of market prices might suffer.</i></p><p><i>Some empirical studies hint at a problem. A paper in 2011 by Jeffrey Wurgler finds that whether a share is part of an index influences its price. Shares that are included in an index go up in value relative to similar shares that are not. When shares drop out of an index, they tend to fall disproportionately. And once in the index, a share’s price moves more in sympathy with others that are also included. Another paper, by researchers at the University of Utah, finds that index inclusion leads to a higher correlation with index prices. Inclusion also spurs a reduction in “information production”: fewer requests for company filings, fewer searches on Google, and fewer research reports from brokerages. Even so, the authors conclude that more intensive effort by the remaining active investors may counter any adverse effects.</i></p></blockquote><p>// <a href="https://www.economist.com/special-report/2020/11/12/stewards-inquiry" target="_blank">Source</a></p>https://notes.misentropy.com/post/645126822350176256https://notes.misentropy.com/post/645126822350176256Mon, 08 Mar 2021 23:01:21 +0100informationsearcheconomy<blockquote><p><i>It is no small irony that momentum trading takes advantage of human weaknesses. One of these is “conservatism bias”. Investors tend to stick to prior views too rigidly and change them only slowly in response to new information. They may give undue emphasis to the price paid for a stock as a marker of its true value and, as a consequence, sell winning stocks too soon and hang on to dud stocks for too long. There is also a contrasting tendency to extrapolate past success. So as well as under-reacting to news, people also over-react to it. Momentum trading seeks to exploit this.</i><br/></p></blockquote><p>// <a href="https://www.economist.com/finance-and-economics/2020/11/19/why-2020-has-been-rotten-for-quant-funds" target="_blank">Source</a></p>https://notes.misentropy.com/post/645036172187467776https://notes.misentropy.com/post/645036172187467776Sun, 07 Mar 2021 23:00:30 +0100conservativestocktradinginvestorsstock marketconservatism bias<blockquote><p><i>Despite their similar acronyms, <small>led</small> sets and <small>oled</small> sets work in substantially different ways. Indeed, the term <small>led</small> is a bit of a misnomer for the former. The crucial parts of the screen are actually the liquid crystals. These are tiny, electronically manipulated shutters that permit or prevent the passage of light. Individual picture elements, known as pixels, consist of a trio of these shutters, each masking a filter that passes light of one of the primary colours, red, green or blue. Behind all this paraphernalia is a strong white backlight which is, indeed, generated these days by light-emitting diodes, but which was once the product of fluorescent bulbs. A pixel’s hue in an <small>led</small> set is determined by how open or closed each of its shutters is, and thus what mixture of primaries gets through them.</i></p><p><i>An <small>oled tv</small>, by contrast, has no backlight. Its pixels are made of organic materials that emit light when stimulated by an electric current. Different materials emit different frequencies, so different colours can be mixed in this way.</i></p><p><i>There is also one other difference. When an <small>oled</small> pixel is switched off, it relaxes to a deep, dark black. Even when closed, however, the shutters of an <small>led</small> system permit some of the backlight to sneak through. The result is not so much black as grey, which reduces the contrast between illuminated and unilluminated pixels.</i></p><p><i>The upshot of these various strengths and weaknesses is that <small>led tv</small>s have bright, high-definition images, while pictures displayed on <small>oled tv</small>s have richer colours and more contrast. Moreover, lacking a backlight, <small>oled</small> <small>tv</small>s can be made slimmer and lighter than the <small>led</small> variety. <small>oled</small> screens are, however, trickier to manufacture. <small>tv</small>s made with them are therefore more expensive—sometimes more than twice the price of a similar sized <small>led</small> television. For the customer, it is thus a matter of, “you pays your money and you takes your choice”.</i></p></blockquote><p>// <a href="https://www.economist.com/science-and-technology/2021/01/25/television-makers-are-pitting-rival-technologies-against-each-other" target="_blank">Source</a></p>https://notes.misentropy.com/post/644945593463144450https://notes.misentropy.com/post/644945593463144450Sat, 06 Mar 2021 23:00:47 +0100TVtechnologyOLEDLEDexplainerthe economist<blockquote><p><i>The Empire State Building was constructed in just 13 months, and that included the dismantling of the Waldorf-Astoria hotel that sat on the site. Paul Starrett, the builder, treated his workers rather well by the standards of the time, paying much attention to safety and paying employees on days when it was too windy to work. Daily wages were more than double the usual rate and hot meals were provided on site.</i></p><p><i>The concept is known as “efficiency wages”. Companies that compensate workers well and treat them fairly can attract better, more motivated staff. Unlike most construction projects, the Empire State Building had low staff turnover, and workers suggested productivity improvements such as building a miniature railway line to bring bricks to the site. But Starrett was not naively generous; he hired accountants to patrol the works, checking that all materials were accounted for, and staff attendance was recorded four times a day.</i></p></blockquote><p>// <a href="https://www.economist.com/business/2020/12/10/why-fair-play-pays" target="_blank">Source</a></p>https://notes.misentropy.com/post/644855004104114176https://notes.misentropy.com/post/644855004104114176Fri, 05 Mar 2021 23:00:55 +0100efficiency wageseconomicswork<blockquote><p><i>But a third explanation provides the strongest case for optimism: it takes time to work out how to use new technologies effectively. <small>ai</small> is an example of what economists call a “general-purpose technology”, like electricity, which has the potential to boost productivity across many industries. But making best use of such technologies takes time and experimentation. This accumulation of know-how is really an investment in “intangible capital”.</i></p><p><i>Recent work by Erik Brynjolfsson and Daniel Rock, of <small>mit</small>, and Chad Syverson, of the University of Chicago, argues that this pattern leads to a phenomenon they call the “productivity J-curve”. As new technologies are first adopted, firms shift resources towards investment in intangibles: developing new business processes. This shift in resources means that firm output suffers in a way that cannot be fully explained by shifts in the measured use of labour and tangible capital, and which is thus interpreted as a decline in productivity growth. Later, as intangible investments bear fruit, measured productivity surges because output rockets upward in a manner unexplained by measured inputs of labour and tangible capital.</i></p></blockquote><p>// <a href="https://www.economist.com/finance-and-economics/2020/12/08/the-pandemic-could-give-way-to-an-era-of-rapid-productivity-growth" target="_blank">Source</a></p>https://notes.misentropy.com/post/644764400493920256https://notes.misentropy.com/post/644764400493920256Thu, 04 Mar 2021 23:00:48 +0100economicsAItechnologyproductivityintangible capital<blockquote><p><i>Another emerging role is that of “chief remote officer”, responsible for designing policies and disseminating best practices for home-working. Succeeding could therefore mean making oneself redundant. Mr Lee thinks this role will eventually disappear, especially at smaller companies (though it may hang around at bigger ones with more complicated and dispersed workforces). As Bhushan Sethi of <small>p</small>w<small>c</small>, a consultancy, points out, something similar happened to chief digital officers, whom firms have recruited with gusto over the past decades. Digital honchos’ ranks are beginning to thin now that digital technology has become part of most companies’ bread and butter.</i><br/></p></blockquote><p>// <a href="https://www.economist.com/business/2021/01/30/the-pandemic-is-ushering-in-new-c-suite-roles" target="_blank">Source</a></p>https://notes.misentropy.com/post/644673909134934016https://notes.misentropy.com/post/644673909134934016Wed, 03 Mar 2021 23:02:29 +0100remote workingofficeworkdesignationsrole<blockquote><p><i>It is tempting to dismiss WallStreetBets and the GameStop saga as a one-off outburst from the murky corners of the internet. That would be a mistake. The researchers say the forum is an example of a “third place”, a term in social science for a hub that is not home or work; churches, cafés and barber shops are all examples from the physical world. It may be baffling, but understanding the community is worth the effort. Not least because, as one user pointed out, even if the collective holding of stocks hasn’t worked this time, it can always try again.</i><br/></p></blockquote><p>// <a href="https://www.economist.com/finance-and-economics/2021/02/06/how-wallstreetbets-works" target="_blank">Source</a></p>https://notes.misentropy.com/post/644583203804463104https://notes.misentropy.com/post/644583203804463104Tue, 02 Mar 2021 23:00:46 +0100third placesociologyhomeofficework<blockquote><p><i>Recently the climate crisis has dominated literary dystopias, spawning another new genre: cli-fi. From Margaret Atwood’s “The Year of the Flood” to John Lanchester’s “The Wall”, authors have considered how rising temperatures will change human life. Ms McConaghy’s novel may be the first in the genre to put the animal world at the centre of its story, mourning dying species and asking what might happen when people forget “what it feels like to love creatures that aren’t human”.</i><br/></p></blockquote><p>// <a href="https://www.economist.com/books-and-arts/2021/02/06/a-moby-dick-for-the-age-of-climate-change" target="_blank">Source</a></p>https://notes.misentropy.com/post/644492619842486272https://notes.misentropy.com/post/644492619842486272Mon, 01 Mar 2021 23:00:58 +0100scifidystopicliteraturecli-ficlimate change<blockquote><p><i>Mr Steele’s thesis in “Ageless” is that ageing can be cured—and, at least in part, that it very soon will be. The giant tortoises of the Galapagos Islands show no age-related decline, in some ways seeming as youthful at 170 as at 30. Mr Steele thinks this phenomenon, known as negligible senescence, is within humanity’s grasp, too.</i><br/></p></blockquote><p>// <a href="https://www.economist.com/books-and-arts/2021/02/06/ageing-can-be-cured-and-in-part-it-soon-will-be" target="_blank">Source</a></p>https://notes.misentropy.com/post/644402013872013312https://notes.misentropy.com/post/644402013872013312Sun, 28 Feb 2021 23:00:50 +0100medicineageingtortoisessenescence<blockquote><p><i>The role of innovation in economic growth evolves as markets and technologies change. Your briefing on government investment in research and development provided useful pointers, but underplayed three important changes in the landscape (“Molecules, missions and money”, January 16th). First, r&amp;d creates and deepens knowledge and the talent to use it in new fields: what economists call absorptive capacity. To be effective, government r&amp;d and investment in talent should align. Second, data analytics induces fundamental changes in r&amp;d, potentially speeding up innovation, creating new businesses. Artificial intelligence and data analytics have become a universal part of the scientific infrastructure, requiring new investment and policies.</i></p><p><i>Third, universities became more entrepreneurial after the financial crisis in 2008. Students want to participate with social purpose and stakeholders are rightly focused on impact. Governments that invest in talent, digital infrastructure and entrepreneurial universities will gain a higher return from their r&amp;d spending.</i></p></blockquote><p>// <a href="https://www.economist.com/letters/2021/02/13/letters-to-the-editor" target="_blank">Source</a></p>https://notes.misentropy.com/post/644311443404210176https://notes.misentropy.com/post/644311443404210176Sat, 27 Feb 2021 23:01:15 +0100economicsinnovationcapacityeconomyr&deconomic growth<blockquote><p><i>While countries wait for supplies, the central role in keeping the virus at bay will be played by non-pharmaceutical interventions (<small>npi</small>), including masks and lockdowns. Modelling from Britain suggests vaccination’s benefits will take time to show up in intensive-care wards. These are full of people in their 50s and 60s because those older than this are often too frail for ventilators and other interventions. When intensive-care wards are full, mortality is a quarter higher than expected. If highly infectious new variants of the virus take hold, <small>npi</small> regimes may even need to be tightened, as Germany’s was this week.</i><br/></p></blockquote><p>// <a href="https://www.economist.com/leaders/2021/01/20/the-marathon-of-covid-19-vaccination" target="_blank">Source</a></p>https://notes.misentropy.com/post/643496030771560448https://notes.misentropy.com/post/643496030771560448Thu, 18 Feb 2021 23:00:37 +0100pharmaceuticalsvaccinationnon-pharmaceuticalinterventions<blockquote><p><i>Conversations which cause controversy in public can be carried out in private with more nuance and no trolling. A distinction can be made between performance and communication. In “The presentation of Self in Everyday Life” Erving Goffman, a 20th-century sociologist, distinguished between “front-stage” behaviour, which is observed by all and sundry, and the “back-stage” life of rehearsal and preparation in the company of others who are part of the same project. “For healthy psychology we need back and front stage,” says Carissa Véliz of Oxford University. “[Online] we have been pushing back stage more and more into oblivion. Having more private messaging brings the back stage back.”</i><br/></p></blockquote><p>// <a href="https://www.economist.com/international/2021/01/23/messaging-services-are-providing-a-more-private-internet" target="_blank">Source</a></p>https://notes.misentropy.com/post/643405468096675840https://notes.misentropy.com/post/643405468096675840Wed, 17 Feb 2021 23:01:09 +0100communicationperformanceback-stagefront-stage<blockquote><p><i>Some firms use a technique known as a “listening circle” in which participants are encouraged to talk openly and honestly about the issues they face (such as problems with colleagues). In such a circle, only one person can talk at a time and there is no interruption. A study cited in the Harvard Business Review found that employees who had taken part in a listening circle subsequently suffered less social anxiety and had fewer worries about work-related matters than those who did not.</i><br/></p></blockquote><p>// <a href="https://www.economist.com/business/2021/01/21/the-secrets-of-successful-listening" target="_blank">Source</a></p>https://notes.misentropy.com/post/643314840735236096https://notes.misentropy.com/post/643314840735236096Tue, 16 Feb 2021 23:00:40 +0100listening circlelisteningempathytechnique<blockquote><p><i>At first the virus looked lethal. Lectures moved online, team exercises became socially distant and study-trips abroad were cancelled. That diminished the value of the <small>mba</small> experience, which is “greatly enhanced by the opportunity to expand and diversify one’s professional network through in-person interactions”, says Scott DeRue, dean of the University of Michigan’s Ross School of Business. Covid-19 restrictions hurt what Ilian Mihov, dean of <small>insead</small>, a French school with campuses in Fontainebleau, Singapore and Abu Dhabi, calls “horizontal learning”—working in teams or discussing the day’s lessons over coffee. Ominously, <small>insead</small>’s most popular <small>mba</small> course last year was “Psychological Issues in Management”. “[I miss] interacting and having fun,” laments a student at New York University’s Stern School of Business. Columbia Business School has disciplined 70 students who violated covid-19 rules on socialising by travelling to Turks and Caicos for the autumn break.</i><br/></p></blockquote><p>// <a href="https://www.economist.com/business/2021/01/23/the-mba-class-of-covid-19" target="_blank">Sources</a></p>https://notes.misentropy.com/post/643224233404678145https://notes.misentropy.com/post/643224233404678145Mon, 15 Feb 2021 23:00:31 +0100educationlearninghorizontalverticalpsychologycovid-19<blockquote><p><i>Soldiers regularly have to deal with the four forces dubbed <small>vuca</small> (volatility, uncertainty, complexity and ambiguity). In particular, Mr Tennant cites the concept of mission command which developed during the Napoleonic wars. Armies found that, by the time messages had arrived at the front, the military situation had changed. The lesson was to establish what the army was trying to achieve before the battle and allow junior commanders to use their initiative and take decisions as the situation demanded.</i><br/></p></blockquote><p>// <a href="https://www.economist.com/business/2020/10/22/what-the-armed-forces-can-teach-business" target="_blank">Source</a></p>https://notes.misentropy.com/post/643133630506565632https://notes.misentropy.com/post/643133630506565632Sun, 14 Feb 2021 23:00:25 +0100VUCAarmyvolatilityuncertaintycomplexityambiguity