The balance of growth and risk in population dynamics

TL;DR

This paper explores how environmental structure influences the balance between growth and risk in populations, revealing a trade-off and how space geometry can mitigate risk in growth strategies, with applications to financial data.

Contribution

It introduces a generalized growth model on graphs to analyze the trade-off between risk and return, highlighting the role of environmental geometry in population dynamics.

Findings

Riskier strategies often lead to higher growth.

Space geometry can reduce the risk associated with growth.

Empirical analysis supports theoretical insights.

Abstract

Essential to each other, growth and exploration are jointly observed in populations, be it alive such as animals and cells or inanimate such as goods and money. But their ability to move, crucial to cope with uncertainty and optimize returns, is tempered by the space/time properties of the environment. We investigate how the environment shape optimal growth and population distribution in such conditions. We uncover a trade-off between risks and returns by revisiting a common growth model over general graphs. Our results reveal a rich and nuanced picture: fruitful strategies commonly lead to risky positions, but this tension may nonetheless be alleviated by the geometry of the explored space. The applicability of our conclusions is subsequently illustrated over an empirical study of financial data.