Wednesday, September 5, 2007

Mathematical Model

Mathematical Model
A mathematical model is an abstract model that uses mathematical language to describe the behaviour of a system. Mathematical models are used particularly in the natural sciences and engineering disciplines (such as physics, biology, and electrical engineering) but also in the social sciences (such as economics, sociology and political science); physicists, engineers, computer scientists, and economists use mathematical models most extensively
Eykhoff (1974) defined a mathematical model as 'a representation of the essential aspects of an existing system (or a system to be constructed) which presents knowledge of that system in usable form'.
Examples of mathematical models
Model of rational behavior for a consumer. In this model we assume a consumer faces a choice of n commodities labelled 1,2,...,n each with a market price p1, p2,..., pn. The consumer is assumed to have a cardinal utility function U (cardinal in the sense that it assigns numerical values to utilities), depending on the amounts of commodities x1, x2,..., xn consumed. The model further assumes that the consumer has a budget M which she uses to purchase a vector x1, x2,..., xn in such a way as to maximize U(x1, x2,..., xn). The problem of rational behavior in this model then becomes an optimization problem, that is:

Max U(x1,x2,…,xn)
subject to:
xi>=o,where i={1,2,3…,n}

Classification of mathematical models

Mathematical models can be classified in several ways, some of which are described below.

1.Linear vs. nonlinear: Mathematical models are usually composed by variables, which are abstractions of quantities of interest in the described systems, and operators that act on these variables, which can be algebraic operators, functions, differential operators, etc. If all the operators in a mathematical model present linearity, the resulting mathematical model is defined as linear. A model is considered to be nonlinear otherwise. In a mathematical programming model, if the objective functions and constraints are represented entirely by linear equations, then the model is regarded as a linear model. If one or more of the objective functions or constraints are represented with a nonlinear equation, then the model is known as a nonlinear model.

2.Deterministic vs. probabilistic (stochastic): A deterministic model is one in which every set of variable states is uniquely determined by parameters in the model and by sets of previous states of these variables. Therefore, deterministic models perform the same way for a given set of initial conditions. Conversely, in a stochastic model, randomness is present, and variable states are not described by unique values, but rather by probability distributions.

3.Static vs. dynamic: A static model does not account for the element of time, while a dynamic model does. Dynamic models typically are represented with difference equations or differential equations
4.Discrete and continuous Models:Discrete networks(with discrete values) and continuous network (with continuous values)

No comments: