Lyapunov Functions, Externalities and Langton's Lambda

Externalities

An externality in an exchange market is an action by one party that materially affects the happiness of someone who is not directly a party to the action.

Externalities make systems churn - less likely to reach equilibrium. Examples include:

1. Arms Trading
• Participants are happy but other countries are unhappy (externality)
2. Political Coalitions
• When Party A merges Party B, Party C may be upsed
3. Mergers
• When two firms merge, other firms are less profitable, less secure
4. Alliances
• When two countries make alliances, other countries are less happy, feeling less secure 

 Systems with externalities affect the Lyapunov Function of other parties which changes their behaviour which in turn may change our behaviour and it generally leads to churn.

Chris Langton's Lambda Parameter

1. Systems where behaviour isn't  influenced by others tend to go to equilibrium
2. Systems where behaviour and actions are influenced by others then to be complex