Technical Report CS-2010-13

Title: How to inhibit destructive positive feedback in time of economic crisis
Authors: Michael Zibulevsky
Abstract: Market economy constitutes a self-regulating system with positive and negative feedbacks. Positive feedbacks accelerate system adaptation to external changes, however, they can also cause loss of stability and auto-oscillations (crises). In this work we propose a new economic mechanism: Contracts conditioned by state of economy. This mechanism can inhibit destructive influence of positive feedbacks in time of crisis, while preserving them during normal state of economy. Thus a central regulator obtains a new precise and efficient instrument of crisis management.
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