Managing Complexity in Socio-Economic Systems

Abstract

This contribution summarizes some typical features of complex systems such as non-linear interactions, chaotic dynamics, the ``butterfly effect’’, phase transitions, self-organized criticality, cascading effects, and power laws. These imply sometimes quite unexpected, counter-intuitive, or even paradoxical behaviors of socio-economic systems. A typical example is the faster-is-slower effect. Due to their tendency of self-organization, complex systems are often hard to control. Instead of trying to control their behavior, it would often be better to pursue the approach of guided self-organization, i.e. to use the driving forces of the system rather than to fight against them. This is illustrated by the example of hierarchical systems, which need to fulfill certain principles in order to be efficient and robust in an ever-changing environment. We also discuss the important role of fluctuations and heterogeneity for the adaptability, flexibility and robustness of complex systems. The presentation is enriched by a number of examples ranging from decision behavior up to production systems and disaster spreading.