Predicting agents' direction of change in a non-stochastic economy using a potential function

Takuma Tanaka ()
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Takuma Tanaka: Graduate School of Data Science, Shiga University

Economics Bulletin, 2022, vol. 42, issue 2, 603 - 608

Abstract: This study examines an optimal agent producing a consumption good and depreciating capital and trading capital without depreciation. Assuming that the prices of the depreciating capital are fixed and that the future prices of undepreciated capital are announced, this study demonstrates that the agent never loses profit on trading undepreciated capital if the agent's state converges to the initial state. Corollary to this result, we found a scalar potential that predicts the change direction of agents trading the undepreciated capital exclusively among them. The similarity between the scalar potential and the Helmholtz free energy suggests that stochastic economic models could be characterized by a framework similar to information thermodynamics.

Keywords: Non-stochastic model; intertemporal choice; capital; planning (search for similar items in EconPapers)
JEL-codes: D1 D9 (search for similar items in EconPapers)
Date: 2022-06-30
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