Article ID Journal Published Year Pages File Type
975753 Physica A: Statistical Mechanics and its Applications 2007 11 Pages PDF
Abstract

We apply methods of quantum mechanics for mathematical modeling of price dynamics at the financial market. The Hamiltonian formalism on the price/price-change phase space describes the classical-like evolution of prices. This classical dynamics of prices is determined by “hard” conditions (natural resources, industrial production, services and so on). These conditions are mathematically described by the classical financial potential V(q),V(q), where q=(q1,…,qn)q=(q1,…,qn) is the vector of prices of various shares. But the information exchange and market psychology play important (and sometimes determining) role in price dynamics. We propose to describe such behavioral financial factors by using the pilot wave (Bohmian) model of quantum mechanics. The theory of financial behavioral waves takes into account the market psychology. The real trajectories of prices are determined (through the financial analogue of the second Newton law) by two financial potentials: classical-like V(q)V(q) (“hard” market conditions) and quantum-like U(q)U(q) (behavioral market conditions).

Related Topics
Physical Sciences and Engineering Mathematics Mathematical Physics
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