Watch our presentation at the 2022 ICEAA Conference in Pittsburg, PA.
Imagine trying to do astronomy without a telescope, biology minus a microscope, or air defense deprived of radar. In all likelihood, you are working from that kind type of disadvantage when it comes to market analysis. And it’s not your fault. To date, there hasn’t been a breakthrough technology for decomposing markets that would expand visualization like telescopes, microscopes and radars which revolutionized their respective fields.
Paul Samuelson, the father of modern economics wrote “the equilibrium price, i.e., the only price that can last…must be at this intersection point of supply and demand curves.”
This is the famous law of supply and demand, and it is viable way to analyze commodities such as iron ore. But what of other markets?
It turns out there has been a missing field of study concerning markets since they began. That field is Hypernomics.
Always seeking actionable as opposed to theoretical outcomes, Hypernomics begins with observations which lead to pattern recognition, which in turn offers predictive insights. We’ve seen that buyers self-organize relative to what they will collectively pay for good and services, and that they self-impose limits on how much they will purchase. We can summarize these findings in The Law of Value and Demand, which states that, when it comes to products,
- Features determine Value,
- Value determines Price,
- Price determines Quantity sold, and
- Quantity sold is a feature.
We have, for example, a pair of self-imposed limits in the business aircraft market, as an Upper Demand Frontier (a price boundary) and Outer Demand Frontier (a saturation threshold) In the figure below, each point on the Demand Plane represents the quantity sold and average price for a given business jet or turboprop aircraft model in the market from 1/1/2009 to 12/31/2018.
Note that there is no single-point equilibrium in this market, as Samuelson would have us believe, but instead dozens of models that flourish at the same time.
What holds those prices up? The Law of Value and Demand predicts, it should be the features of these planes. When we do the analysis in Value Space in our MEE4DTM software at left, we find their prices are largely determined by their cabin volumes and maximum speed. Deeper analysis might reveal other features that drive price. Examination the error terms associated with this estimate may let users find under or overpriced models.
Every point in the left-hand Value Space entangles with its matching point on the right-hand Demand Plane, forming a system of ordered quads. Here we describe each point with (Max MPH, Cabin Volume, Price, Quantity sold 2009-2018), or, more generally, with (Valued Feature 1, Valued Feature 2, Price, Quantity).
This observation, first made by Hypernomics Inc., is universal for all markets and the primary building block for our technology.