What the Tea Party is doing in Congress is completing the other half of a two part deal, two consecutive Hicks equilibriums. Rajiv turned me on a partial Hicks equilibrium in his blog.
The idea of partial equilibrium is that we take the best of the alternatives and call it a day. So, Nancy Pelosi calibrates how much give she will produce on round two, then she knows ahead of time when an Obamacare is good enough, she knows the uncertainty levels of the next Congress.
A Hicks equilibrium is an incomplete version of an inventory node in the Shannon channel model of economic production. I drilled down into that literature a bit, and the talk in Hicks equilibrium is the idea of an uncertainty level. To partially equilibriate implies there is an advanced amount of tolerable uncertainty. In any given trade we have to know when good enough arrives, that we may pass the goods down stream. We QM theorists call this the herding constant of the human species, because it is ultimately traced back to the ability to mammal to match the spread of the herd to the resources in the environment.
The existence of an uncertainty constant implies an ordinal system, in the market, hence an entropy norm. When it is about time to go to market, we go to market and choose the best of limited alternatives. Inside the firm or household, we monitor the variances ot total inventory, minimizing variance across inventory types. The variance we tolerate in the firm inventories must match the variation in alternatives good over alternative market timings, it is constant and biological. Production is required to complete the equilibrium in stages. We humans are biologically forced into economies of scale. Now e mail me a Nobel prize.
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