Saturday, February 26, 2011

Here's a problem set

You go to the open air market, and see three people in line to buy a carton of eggs. Take out your watch and compute the interest rate of a 30 year mortgage. We know it is possible with a stable queuing network to do this, we have the tools. But, you say, I would have a terrible error. Would you?

Consider the second case. You go to the supermarket in a small town and meet a maid doing the grocery shopping for the mistriess. Can you guess the relative value of the mistress' home? Very likely you could, and you may even have a good guess of the neighborhood that the mistress lives in.

The two problems are closely related queueing problems in the economy. The arrangement of houses, towns, eggs and maids is easily understood in our heads, we do graph algebra in our heads, and the economic network executes our graph algebra.

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