On the entropy function in sociotechnical systems

Abstract

The entropy function H = -Sigmap(j) log p(j) (p(j) being the probability of a system being in state j) and its continuum analogue H = integralp(x) log p(x) dx are fundamental in Shannon's theory of information transfer in communication systems. It is here shown that the discrete form of H also appears naturally in single-lane traffic flow theory. In merchandising, goods flow from a whole-saler through a retailer to a customer. Certain features of the process may be deduced from price distribution functions derived from Sears Roebuck and Company catalogues. It is found that the dispersion in logarithm of catalogue prices of a given year has remained about constant, independently of the year, for over 75 years. From this it may be inferred that the continuum entropy function for the variable logarithm of price had inadvertently, through Sears Roebuck policies, been maximized for that firm subject to the observed dispersion.