APPLIED LINEAR ALGEBRA

Lecture 11: Applications of Eigenvalue Problems

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 1 1. Markov chain

2 2. Leslie Model for population growth

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 1. Markov chain
EXAMPLE OF MARKOV CHAIN → Stock analysis
Assume that there are 3 states of the closing price: “higher,”
“unchanged,” and “lower” compared with the previous day’s closing
price.
The transition rules from TODAY to THE NEXT DAY are given as
follows:

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 1. Markov chain

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 1. Markov chain
PROBLEM: What is the transition matrix in the Example of stock anal-
ysis?

ANSWER:

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 1. Markov chain
DISTRIBUTION VECTORS
Initial distribution vector

Here p1 , p2 , . . . , pn are probabilities representing the system initially

being in state 1, state 2, . . . , state n.
Distribution vector after m observations is given by

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 1. Markov chain
PROBLEM: Assume that the stock price is “unchanged” TODAY.
Write the Initial distribution vector?
What is the distribution vector after 1 day? What does this vector
mean?

Solution: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Lecture 11: Applications of Eigenvalue Problems APPLIED LINEAR ALGEBRA
 1. Markov chain
MORE EXAMPLE OF MARKOV CHAIN → Taxi company
A taxi company divided a city into three zones: Zone I, Zone II, and Zone
III. A management of the company records that if the passengers picked
up in Zone I, 60% go to the same zone, 30% go to Zone II, and 10% go
to Zone III. Of those picked up in Zone II, 40% to Zone I, 30% to Zone II,
and 30% to Zone III. Of those picked up in Zone III, 30% to Zone I, 30%
to Zone II, and 40% to Zone III. At the beginning of the day, 80% of the
cabs are in Zone I, 15% are in Zone II, and 5% are in Zone III.
Find the transition matrix for the Markov chain that describes the
successive locations of a cab.
What is the distribution of the cabs after all of them have made one
pickup and discharge?
What is the distribution of the cabs after all of them have made two
pickups and discharges?

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 1. Markov chain
Solution:

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 1. Markov chain
STEADY-STATE VECTOR
Steady-state vector X is the limit of vector sequence

X0 , X1 , X2 , . . . , Xm , . . . , → X

Steady-state vector X can be seen as the distribution vector after

SO MANY observations, or long term distribution.
HOW TO FIND STEADY-STATE VECTOR?

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 1. Markov chain
PROBLEM: Find the steady-state distribution vector for the regular
Markov chain whose transition matrix is

Solution: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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. . .11:. .Applications
Lecture . . . . . . . of. .Eigenvalue
. . . . . . .Problems
. . . . . .APPLIED
. . . . . . LINEAR
. . . . . ALGEBRA
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 1. Markov chain
PROBLEM: Find the steady-state distribution vector in the Example of
taxi company

Solution: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 1. Markov chain
PROBLEM: In a study of the domestic market share of the three major
automobile manufacturers A, B, and C in a certain country, it was found
that of the customers who bought a car manufactured by A, 75% would
again buy a car manufactured by A, 15% would buy a car manufactured
by B, and 10% would buy a car manufactured by C. Of the customers who
bought a car manufactured by B, 90% would again buy a car manufactured
by B, whereas 5% each would buy cars manufactured by A and C. Finally,
of the customers who bought a car manufactured by C, 85% would again
buy a car manufactured by C, 5% would buy a car manufactured by A,
and 10% would buy a car manufactured by B.
What is the transition matrix for the Markov chain?
What is the initial distribution?
What is the market share of each manufacturer after 2 rounds?
What is the market share that will be held by each manufacturer in
the long run?

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 2. Leslie Model for population growth
LESLIE MODEL:
Assumptions: the female of rabbit can live at most 9 years,
devided into 3 classes of 3 years each
Leslie matrix:

where l1k , k = 1, 2, 3 is the average number of daughters born to a

single female during the time she is in age class k, and
lj,j−1 , (j = 2, 3) is the fraction of females in class (j − 1) that will
survive and pass into class j

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 2. Leslie Model for population growth
LESLIE MODEL (continue...):
QUESTIONS:
(a) What is the number of females after 3, 6, 9 years if each class
initially consists of 400 females?
(b) For what initial distribution will the number of females in each class
change by the same proportion?
(c) What is this rate of change?

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 2. Leslie Model for population growth
Solution: (a)
Initial vector of female:

After 3 years:

After 6 years:

After 9 years:

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 2. Leslie Model for population growth
Solution: (b), (c)
NOTE: Finding proportional change means that we are looking for a
distribution vector x such that Lx = λx, where λ is the rate of change
(growth if λ > 1 decrease if λ < 1).
The characteristic equation:

Solving characteristic equation: λ = 1.2

Finding eigenvector corresponding to λ = 1.2:

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 2. Leslie Model for population growth
Solution: (b), (c)
NOTE: To get an initial population of 1200 as before, we multiply x
by

CONSLUSION (b): Proportional growth of the numbers of females

in the three classes will occur if the initial values are 738, 369, 92 in
classes 1, 2, 3, respectively.
CONSLUSION (c): The growth rate will be 1.2 per 3 years

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