Volleyball and Equilibrium

31 October 2006 at 8:39 am Lasse 2 comments

| Lasse Lien |

What exactly is the role of equilibrium in the competitive process? Believe it or not, I have found the answer. It plays the same role as gravity does in a volleyball match.

Think about it! The ball is continuously bounced in ways that direct it towards new states of rest (new equilibriums), but it hardly ever settles down in any of these, because it is subject to new bounces, sending it towards yet another equilibrium. Moreover, about half the time the ball is moving opposite of what gravity would dictate, i.e. it is moving upwards, but unless it is bounced again it will start falling downwards and settle in the position gravity dictates (operating on the last bounce). Of course, this never occurs because the ball is continuously bounced. So a theory of gravity alone would not provide a good prediction of where the ball is, nor where it is headed, or even how the game got started. But mind you, think about how absurd it would be to try to understand a game of volleyball without any notion of gravity!

Entry filed under: - Lien -, Austrian Economics, Entrepreneurship, Former Guest Bloggers, Methods/Methodology/Theory of Science, Strategic Management.

Choosing Your Institutional Environment Prediction Markets and Corporate Governance

2 Comments Add your own

1. Rafe | 31 October 2006 at 6:28 pm

Nice work Lasse! That looks like a remarkably good analogy as a first approximation to the role of equilibrium in economic activities!

Can people identify where the analogy breaks down, or at least how it needs to be modified to go past the first approximation and get back to the actual processes that are at work?
2. Lasse | 1 November 2006 at 4:14 am

Thanks for the kind words, Rafe. Let me make a general comment by way of an analogy for analogies. Analogies are clearly like rubber bands. If you stretch them too far they will snap and loose all their usefulness (and may even hurt your hand) ;-)