Related papers: Information equilibrium as an economic principle
We consider the thermodynamic properties of systems in contact with an information source and focus on the consequences of energetic cost associated with the exchange of information. To this end we introduce the model of a thermal tape and…
Sagawa and Ueda established a fluctuation theorem of information exchange by revealing the role of correlations in stochastic thermodynamics and unified the non-equilibrium thermodynamics of measurement and feedback control [T. Sagawa and…
A data intermediary acquires signals from individual consumers regarding their preferences. The intermediary resells the information in a product market wherein firms and consumers tailor their choices to the demand data. The social…
This paper consists of two parts. In the first part, we develop a new information theory, in which it is not a coincidence that information and physical entropy share the same mathematical formula. It is an adaptation of mind to help search…
We model an informed agent with information about the future value of an asset trying to maximize profits when subjected to a transaction cost as well as a market maker tasked with setting fair transaction prices. In a single auction model,…
We discuss the role of information entropy on the behaviour of random processes, and how this might take effect in the dynamics of financial market prices. We then go on to show how the Open Quantum Systems approach can be used as a more…
We have used agent-based modeling as our numerical method to artificially simulate a dynamic real economy where agents are rational maximizers of an objective function of Cobb-Douglas type. The economy is characterised by heterogeneous…
The existing concept of the "fitness value of information" provides a theoretical upper bound on the fitness advantage of using information concerning a fluctuating environment. Using concepts from rate-distortion theory, we develop a…
The method of model averaging has become an important tool to deal with model uncertainty, for example in situations where a large amount of different theories exist, as are common in economics. Model averaging is a natural and formal…
We propose and compare new global solution algorithms for continuous time heterogeneous agent economies with aggregate shocks. First, we approximate the agent distribution so that equilibrium in the economy can be characterized by a high,…
We consider a model of oligopolistic competition in a market with search frictions, in which competing firms with products of unknown quality advertise how much information a consumer's visit will glean. In the unique symmetric equilibrium…
The computation of equilibrium prices at which the supply of goods matches their demand typically relies on complete information on agents' private attributes, e.g., suppliers' cost functions, which are often unavailable in practice.…
Non-equilibrium systems exchange information in addition to energy. In information thermodynamics, the information flow is characterized by the learning rate, which is not invariant under coordinate transformations. To formalize the…
We develop a methodology that utilizes deep learning to simultaneously solve and estimate canonical continuous-time general equilibrium models in financial economics. We illustrate our method in two examples: (1) industrial dynamics of…
Widespread use of the Internet and social networks invokes the generation of big data, which is proving to be useful in a number of applications. To deal with explosively growing amounts of data, data analytics has emerged as a critical…
A model of quintessential inflation is presented, which manages to achieve the requirements of both inflation and quintessence with natural values of the mass-scales and parameters.
The rise of the machine learning (ML) model economy has intertwined markets for training datasets and pre-trained models. However, most pricing approaches still separate data and model transactions or rely on broker-centric pipelines that…
Information-theoretic quantities, such as entropy, are used to quantify the amount of information a given variable provides. Entropies can be used together to compute the mutual information, which quantifies the amount of information two…
This chapter reviews an information theoretic approach to deriving quantum fluctuation theorems. When a thermal system is driven from equilibrium, random quantities of work are required or produced: the Crooks equality is a classical…
The digital age provides new challenges as information travels more quickly in a system of increasing complexity. But it also offers new opportunities, as we can track and study the system more efficiently. Several studies individually…