Related papers: WARNING: Physics Envy May Be Hazardous To Your Wea…
I contrast two possible attitudes towards a given branch of physics: as inferential (i.e., as concerned with an agent's ability to make predictions given finite information), and as dynamical (i.e., as concerned with the dynamical equations…
Econophysics has developed as a research field that applies the formalism of Statistical Mechanics and Quantum Mechanics to address Economics and Finance problems. The branch of Econophysics that applies of Quantum Theory to Economics and…
Disagreement is an essential element of science and life in general. The language of probabilities and statistics is often used to describe disagreements quantitatively. In practice, however, we want much more than that. We want…
This paper discusses serious drawbacks of existing knowledge in macroeconomics and finance in explaining and predicting economic and financial phenomena. Complexity science is proposed as an alternative approach to be used in order to…
Several problems arising in Economics and Finance are analyzed using concepts and quantitative methods from Physics. Here is the abridged abstact: Chapter 1: By analogy with energy, the equilibrium probability distribution of money must…
The aim of this study is to present proofs for new theorems. Basic thoughts of new definitions emerge from the decision-making under uncertainty in economics and finance. Shape of the certain utility curve is central to standard definitions…
Laymen and sometimes even physicists think of natural sciences, in particular of theoretical and mathematical physics often as subjects, which unfold according to an intrinsic logical pattern, with the limitations being set only by the…
The statistical description and modeling of volatility plays a prominent role in econometrics, risk management and finance. GARCH and stochastic volatility models have been extensively studied and are routinely fitted to market data, albeit…
Most physics theories are deterministic, with the notable exception of quantum mechanics which, however, comes plagued by the so-called measurement problem. This state of affairs might well be due to the inability of standard mathematics to…
During its history, the ultimate goal of economics has been to develop similar frameworks for modeling economic behavior as invented in physics. This has not been successful, however, and current state of the process is the neoclassical…
The conventional economic approaches explore very little about the dynamics of the economic systems. Since such systems consist of a large number of agents interacting nonlinearly they exhibit the properties of a complex system. Therefore…
Decision-makers abhor uncertainty, and it is certainly true that the less there is of it the better. However, recognizing that uncertainty is part of the equation, particularly for deciding on environmental policy, is a prerequisite for…
Oscillations are observed in all branches of science and culture, ranging from the behavior of ele-mentary particles, atoms, molecules in simple chemical or physical systems or even in complex organisms, up to oscillations of the behavior…
We analyze complexity of financial (and general economic) processes by comparing classical and quantum-like models for randomness. Our analysis implies that it might be that a quantum-like probabilistic description is more natural for…
It is hard to overstate the importance that the concept of symmetry has had in every field of physics, a fact alluded to by the Nobel Prize winner P.W. Anderson, who once wrote that physics is the study of symmetry. Whereas the idea of…
Developing and making sense of quantitative models is a core practice of physics. Covariational reasoning -- considering how the changes in one quantity affect changes in another, related quantity -- is an essential part of modeling…
Mounting evidences are being gathered suggesting that income and wealth distribution in various countries or societies follow a robust pattern, close to the Gibbs distribution of energy in an ideal gas in equilibrium, but also deviating…
Uncertainty quantification is a key part of astronomy and physics; scientific researchers attempt to model both statistical and systematic uncertainties in their data as best as possible, often using a Bayesian framework. Decisions might…
The Bayesian statistical paradigm provides a principled and coherent approach to probabilistic forecasting. Uncertainty about all unknowns that characterize any forecasting problem -- model, parameters, latent states -- is able to be…
This text revisits the origins of econophysics through the figure of Beno\^it Mandelbrot, not as the father of fractals, but as the instigator of a distinctive scientific posture. The guiding thread is methodological: accept the stubborn…