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The 80/20 Rule

Devoted himself to finding laws in economics, trying to make it into an exact science. Author of the three-volume Trattato di Sociologia Generale First noticed the 80/20 Rule Pareto’s Law of Principle. Vilfredo Pareto 1848 - 1923. The 80/20 Rule. Examples of the 80/20 Rule.

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The 80/20 Rule

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  1. Devoted himself to finding laws in economics, trying to make it into an exact science. Author of the three-volume Trattato di Sociologia Generale First noticed the 80/20 Rule Pareto’s Law of Principle Vilfredo Pareto 1848 - 1923 The 80/20 Rule

  2. Examples of the 80/20 Rule • 80% of Pareto’s peas came from 20% of the peapods. • 80% of Italy’s land was owned by 20% of the people • 80% of profit is produced by 20% of employees. • 80% of crime is committed by 20% of the criminals.

  3. Bell Curve • In this example, we see the IQ score and the % of the population. • A Bell Curve does not allow IQ under 0 or over 165 in this modell. • General rule is that most will be at the center of the curve, while a few will be on the left and right side.

  4. Power Law • In a Bell Curve you don’t allow the very very “unusual” event. • The web and number of links follow a power law.

  5. The web and the distribution of links follow a power law, and that shows us that there are a few hubs that has millions of links, but the average is a much smaller number. (1999) • Erdòs and Rènyi, along with Watts and Strogatz, both told us that nodes with k links should decrease exponentially. They both told us that hubs do not exist. • If the 80/20 Rule applies, the distribution can be shown as a power law.

  6. Phase Transition • Water to ice. • Metal to magnet. • From disorder to order. • After the transition they follow power laws. (?) • How does order emerge from disorder?

  7. The answer • Kenneth Wilson (1936 - ) • Renormalization • Nobel prize in physics 1982

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