Power Law

Twice the output at a quarter of frequency

Also known as Price’s Law, it states that half the output of a system is generated by a square root of the number of output generators. For example, if a company has 100 salespeople, 50% of the revenue comes from 10 salespeople and the other 50% of the revenue comes from 90 salespeople. If a basketball team has 50 basketball players, 7 of them score half the points:

“Buffett was, in effect, using the winning method of the famous basketball coach, John Wooden, who won most regularly after he had learned to assign virtually all playing time to his seven best players. That way, opponents always faced his best players, instead of his second best. And, with the extra playing time, the best players improved more than was normal.”
Charlie Munger

“In terms of energy, it turns out that the Gutenberg-Richter law boils down to one very simple rule: If earthquakes of type A release twice the energy of those of type B, then type A quakes happen four times less frequently. Double the energy, that is, and an earthquake becomes four times as rare. This simple pattern — a power law — holds for quakes over a tremendous range of energies.

Remarkably, Bak and his colleagues found a similar relationship for avalanches in the

sandpile game. Counting up how frequently avalanches of each size happened, they found that avalanches toppling anything from a few up to a few…