Demand Externality / Step Model

The AI Layoff Trap

Parametersw = 1

N — firms7

c — AI cost per task0.30

λ — worker spending share0.50

η — income replacement0.30

k — integration friction1.00

Nash equilibrium αᴺᴱ

—

Cooperative αᶜᴼ

—

Over-automation wedge

—

Threshold N*

—

Demand level D(α)

—

Step through the narrative, or drag to orbit / scroll to zoom. Green towers = automated tasks. The translucent floor is demand — it sinks as automation spreads. Cyan rail = cooperative optimum, green rail = Nash equilibrium. The gap between them is the wedge.

Live model — Three.js

human tasks automated tasks demand surface cooperative optimum Nash equilibrium

What you are seeing: each pillar is a firm. The green section is the work done by AI. The translucent floor is consumer demand; it sinks as layoffs reduce spending.