Quantization in Financial Economics: An Information-Theoretic Approach

Raymond J. Hawkins () and B. Roy Frieden ()
Additional contact information
Raymond J. Hawkins: The University of Arizona
B. Roy Frieden: The University of Arizona

A chapter in The Palgrave Handbook of Quantum Models in Social Science, 2017, pp 19-38 from Palgrave Macmillan

Abstract: Abstract The authors show how the formal framework of quantum mechanics arises in economics generally and in financial economics in particular as a natural consequence of an information-theoretic approach to these fields. Specifically, extremizing Fisher information, subject to the constraint that the associated probability density reproduces observed economic phenomena, results in Schrödinger-like equations. The authors illustrate the utility of this approach with examples from financial economics. As an emergent consequence of information theory, the use of quantum formalism in economics can be seen as a powerful approach for understanding complex dynamics grounded in the probabilistic view of economics advocated by Knight and Keynes.

Keywords: Cash Flow; Option Price; Discount Factor; Physical Review; Fisher Information (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-49276-0_2

Ordering information: This item can be ordered from
http://www.palgrave.com/9781137492760

DOI: 10.1057/978-1-137-49276-0_2

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().