The Dynamics of Money
Statistical Mechanics
2011-04-12 v2 adap-org
Adaptation and Self-Organizing Systems
General Finance
Abstract
We present a dynamical many-body theory of money in which the value of money is a time dependent ``strategic variable'' that is chosen by the individual agents. The value of money in equilibrium is not fixed by the equations, and thus represents a continuous symmetry. The dynamics breaks this continuous symmetry by fixating the value of money at a level which depends on initial conditions. The fluctuations around the equilibrium, for instance in the presence of noise, are governed by the ``Goldstone modes'' associated with the broken symmetry. The idea is illustrated by a simple network model of monopolistic vendors and buyers.
Keywords
Cite
@article{arxiv.cond-mat/9811094,
title = {The Dynamics of Money},
author = {Per Bak and Simon F. Norrelykke and Martin Shubik},
journal= {arXiv preprint arXiv:cond-mat/9811094},
year = {2011}
}
Comments
5 pages, 2 figures, to be published in Phys.Rev.E