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Knowledge Creation as a Square Dance on the Hilbert Cube

  • Marcus Berliant

    (Washington University in St. Louis)

  • Masahisa Fujita

    (Kyoto University)

This paper presents a micro-model of knowledge creation through the interactions among a group of people. Our model incorporates two key aspects of the cooperative process of knowledge creation: (i) heterogeneity of people in their state of knowledge is essential for successful cooperation in the joint creation of new ideas, while (ii) the very process of cooperative knowledge creation affects the heterogeneity of people through the accumulation of knowledge in common. The model features myopic agents in a pure externality model of interaction. Surprisingly, in the general case for a large set of initial conditions we find that the equilibrium process of knowledge creation converges to the most productive state, where the population splits into smaller groups of optimal size; close interaction takes place within each group only. This optimal size is larger as the heterogeneity of knowledge is more important in the knowledge production process. Equilibrium paths are found analytically, and they are a discontinuous function of initial heterogeneity.

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File URL: http://econwpa.repec.org/eps/game/papers/0506/0506006.pdf
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Paper provided by EconWPA in its series Game Theory and Information with number 0506006.

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Length: 64 pages
Date of creation: 22 Jun 2005
Date of revision: 26 Sep 2005
Handle: RePEc:wpa:wuwpga:0506006
Note: Type of Document - pdf; pages: 64
Contact details of provider: Web page: http://econwpa.repec.org

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  1. Helsley, Robert W. & Strange, William C., 2004. "Knowledge barter in cities," Journal of Urban Economics, Elsevier, vol. 56(2), pages 327-345, September.
  2. Marcus Berliant & Robert R. Reed III & Ping Wang, 2005. "Knowledge Exchange, Matching, and Agglomeration," Urban/Regional 0506013, EconWPA, revised 07 Jul 2005.
  3. Auerswald, Philip & Kauffman, Stuart & Lobo, Jose & Shell, Karl, 2000. "The production recipes approach to modeling technological innovation: An application to learning by doing," Journal of Economic Dynamics and Control, Elsevier, vol. 24(3), pages 389-450, March.
  4. Masahisa Fujita & Shlomo Weber, 2003. "Strategic Immigration Policies and Welfare in Heterogeneous Countries," KIER Working Papers 569, Kyoto University, Institute of Economic Research.
  5. Fujita,Masahisa & Thisse,Jacques-François, 2013. "Economics of Agglomeration," Cambridge Books, Cambridge University Press, number 9780521171960, 1.
  6. Gilles Duranton & Diego Puga, 2000. "Nursery Cities: Urban diversity, process innovation, and the life-cycle of products," Working Papers dpuga-00-01, University of Toronto, Department of Economics.
  7. Berliant, Marcus & Fujita, Masahisa, 2007. "Dynamics of knowledge creation and transfer: The two person case," MPRA Paper 4973, University Library of Munich, Germany.
  8. Boldrin,Michele & Levine,David K., 2010. "Against Intellectual Monopoly," Cambridge Books, Cambridge University Press, number 9780521127264, 1.
  9. Ajay Agrawal & Iain Cockburn & John McHale, 2003. "Gone But Not Forgotten: Labor Flows, Knowledge Spillovers, and Enduring Social Capital," NBER Working Papers 9950, National Bureau of Economic Research, Inc.
  10. Keely, Louise C., 2003. "Exchanging good ideas," Journal of Economic Theory, Elsevier, vol. 111(2), pages 192-213, August.
  11. Jones, Larry E & Manuelli, Rodolfo E, 1990. "A Convex Model of Equilibrium Growth: Theory and Policy Implications," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1008-38, October.
  12. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October.
  13. Boyan Jovanovic & Rafael Rob, 1989. "The Growth and Diffusion of Knowledge," Review of Economic Studies, Oxford University Press, vol. 56(4), pages 569-582.
  14. Aoki, Masahiko, 1994. "The Contingent Governance of Teams: Analysis of Institutional Complementarity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(3), pages 657-76, August.
  15. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  16. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
  17. Keely,L.C., 2002. "Exchanging good ideas," Working papers 14, Wisconsin Madison - Social Systems.
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