Almost Everything I Need to Know About the New Economy, I Learned Playing . . . Monopoly

Abstract:     
In this note, the authors use the familiar game of Monopoly to illustrate the new economy phenomena of network effects, increasing returns, positive feedback, and bifurcation points in complex systems. They argue that the "new economy" is not really so new if it shares so many characteristics with an "old economy" game. In any case, it will be easier to understand the important characteristics of a "winner-take-all" economy in the context of this family game that is surprisingly complex. The note makes an effort to differentiate between increasing returns and positive feedback, two concepts that are often confused and sometimes treated as if they were equivalent to each.

Working Paper Series