Related papers: The Equilibrium Statistical Model of Economic Syst…
The application of principles of thermodynamics and statistical mechanics to economic systems is considered in a broad historical perspective, extending from prehistoric times to the present day. The hypothesis of maximum entropy production…
In a closed economic system, money is conserved. Thus, by analogy with energy, the equilibrium probability distribution of money must follow the exponential Gibbs law characterized by an effective temperature equal to the average amount of…
In this paper we discuss some examples of systems composed of $N$ units, which exchange a conserved quantity $x$ according to some given stochastic rule, from some standard kinetic model of condensed matter physics to the kinetic exchange…
We analyze the relationships between game theory and quantum mechanics and the extensions to statistical physics and information theory. We use certain quantization relationships to assign quantum states to the strategies of a player. These…
In statistical physics, the conservation of particle number results in the equalization of the chemical potential throughout a system at equilibrium. In contrast, the homogeneity of utility in socio-economic models is usually thought to…
This paper develops a new model of business cycles. The model is economical in that it is solved with an aggregate demand-aggregate supply diagram, and the effects of shocks and policies are obtained by comparative statics. The model builds…
Physics and economics are two disciplines that share the common challenge of linking microscopic and macroscopic behaviors. However, while physics is based on collective dynamics, economics is based on individual choices. This conceptual…
We describe society as a nonequilibrium probabilistic system: N individuals occupy W resource states in it and produce entropy S over definite time periods. Resulting thermodynamics is however unusual because a second entropy, H, measures a…
A brief overview of the models and data analyses of income, wealth, consumption distributions by the physicists, are presented here. It has been found empirically that the distributions of income and wealth possess fairly robust features,…
The foundations of the Boltzmann-Gibbs (BG) distributions for describing equilibrium statistical mechanics of systems are examined. Broadly, they fall into: (i) probabilistic paaroaches based on the principle of equal a priori probability…
In this short paper, we overview and extend the results of our papers cond-mat/0001432, cond-mat/0008305, and cond-mat/0103544, where we use an analogy with statistical physics to describe probability distributions of money, income, and…
In this communication, the derivation of the Boltzmann-Gibbs and the Maxwellian distributions is presented from a geometrical point of view under the hypothesis of equiprobability. It is shown that both distributions can be obtained by…
General Equilibrium Theory is the benchmark of economics, especially its results concerning the efficient allocation of resources, known as the First and Second Welfare Theorems. Yet, General Equilibrium Theory is beyond the scope of most…
For studying the thermodynamic properties of systems using statistical mechanics we propose an ensemble that lies in between the familiar canonical and microcanonical ensembles. From a comparative study of these ensembles we conclude that…
Foundations of equilibrium thermodynamics are the equation of state (EoS) and four postulated laws of thermodynamics. We use equilibrium thermodynamics paradigms in constructing the EoS for microeconomics system that is a market. This…
Econophysics provides a strategy for understanding the potential mechanisms underlying the anomalous distribution of wealth found in real societies. We present a computational nonlinear stochastic model for the distribution of wealth that…
We applied Dirac distribution, Bose-Einstein distribution, and occasionally Boltzmann-Gibbs distribution in order to determine which is optimal for income distribution on a large pool of countries. The best fit to the data was observed in…
Formalism based on equilibrium statistical thermodynamics is applied to communication networks of decision making individuals. It is shown that in statistical ensembles for choice models, properly defined disutility can play the same role…
We consider a simple model of a closed economic system where the total money is conserved and the number of economic agents is fixed. In analogy to statistical systems in equilibrium, money and the average money per economic agent are…
General equilibrium is the dominant theoretical framework for economic policy analysis at the level of the whole economy. In practice, general equilibrium treats economies as being always in equilibrium, albeit in a sequence of equilibria…