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Physics Of Financial Markets
Physics of financial markets is a non-orthodox economics discipline that studies financial markets as physical systems. It seeks to understand the nature of financial processes and phenomena by employing the scientific method and avoiding beliefs, unverifiable assumptions and immeasurable notions, not uncommon to economic disciplines. Physics of financial markets addresses issues such as theory of price formation, price dynamics, market ergodicity, collective phenomena, market self-action, and market instabilities. Physics of financial markets should not be confused with mathematical finance, which are only concerned with descriptive mathematical modeling of financial instruments without seeking to understand nature of underlying processes. See also *Econophysics * Social physics * Quantum economics *Thermoeconomics * Quantum finance *Kinetic exchange models of markets *Brownian model of financial markets The Brownian motion models for financial markets are based on the work of ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Heterodox Economics
Heterodox economics is a broad, relative term referring to schools of economic thought which are not commonly perceived as belonging to mainstream economics. There is no absolute definition of what constitutes heterodox economic thought, as it is defined in contrast to the most prominent, influential or popular schools of thought in a given time and place.Dequench, David (2007) "Neoclassical, mainstream, orthodox, and heterodox economics", ''Journal of Post Keynesian Economics'', 30 (2), 279-30/ref> Groups typically classed as heterodox in current discourse include the Austrian school of economics, Austrian, Ecological economics, ecological, Marxian economics, Marxist-Historical school of economics, historical, Post-Keynesian economics, post-Keynesian, and modern monetary theory, modern monetary approaches.Frederic S. Lee, 2008. "heterodox economics," ''The New Palgrave Dictionary of Economics'', 2nd Edition, v. 4, pp. 2–65Abstract. Four frames of analysis have been highlight ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Social Physics
Social physics or sociophysics is a field of science which uses mathematical tools inspired by physics to understand the behavior of human crowds. In a modern commercial use, it can also refer to the analysis of social phenomena with big data. Social physics is closely related to econophysics, which uses physics methods to describe economics. History The earliest mentions of a concept of social physics began with the English philosopher Thomas Hobbes. In 1636 he traveled to Florence, Italy, and met physicist-astronomer Galileo Galilei, known for his contributions to the study of motion. It was here that Hobbes began to outline the idea of representing the "physical phenomena" of society in terms of the laws of motion. In his treatise ''De Corpore'', Hobbes sought to relate the movement of "material bodies" to the mathematical terms of motion outlined by Galileo and similar scientists of the time period. Although there was no explicit mention of "social physics", the sentiment of ex ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Brownian Model Of Financial Markets
The Brownian motion models for financial markets are based on the work of Robert C. Merton and Paul A. Samuelson, as extensions to the one-period market models of Harold Markowitz and William F. Sharpe, and are concerned with defining the concepts of financial assets and markets, portfolios, gains and wealth in terms of continuous-time stochastic processes. Under this model, these assets have continuous prices evolving continuously in time and are driven by Brownian motion processes. This model requires an assumption of perfectly divisible assets and a frictionless market (i.e. that no transaction costs occur either for buying or selling). Another assumption is that asset prices have no jumps, that is there are no surprises in the market. This last assumption is removed in jump diffusion models. Financial market processes Consider a financial market consisting of N + 1 financial assets, where one of these assets, called a '' bond'' or ''money market'', is risk free while th ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Kinetic Exchange Models Of Markets
Kinetic exchange models are multi-agent dynamic models inspired by the statistical physics of energy distribution, which try to explain the robust and universal features of income/wealth distributions. Understanding the distributions of income and wealth in an economy has been a classic problem in economics for more than a hundred years. Today it is one of the main branches of econophysics. Data and basic tools In 1897, Vilfredo Pareto first found a universal feature in the distribution of wealth. After that, with some notable exceptions, this field had been dormant for many decades, although accurate data had been accumulated over this period. Considerable investigations with the real data during the last fifteen years (1995–2010) revealed that the tail (typically 5 to 10 percent of agents in any country) of the income/wealth distribution indeed follows a power law. However, the majority of the population (i.e., the low-income population) follows a different distribution w ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Quantum Finance
Quantum finance is an interdisciplinary research field, applying theories and methods developed by quantum physicists and economists in order to solve problems in finance. It is a branch of econophysics. Quantum continuous model Most quantum option pricing research typically focuses on the quantization of the classical Black–Scholes–Merton equation from the perspective of continuous equations like the Schrödinger equation. Emmanuel Haven builds on the work of Zeqian Chen and others, but considers the market from the perspective of the Schrödinger equation. The key message in Haven's work is that the Black–Scholes–Merton equation is really a special case of the Schrödinger equation where markets are assumed to be efficient. The Schrödinger-based equation that Haven derives has a parameter ''ħ'' (not to be confused with the complex conjugate of ''h'') that represents the amount of arbitrage that is present in the market resulting from a variety of sources includi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Thermoeconomics
Thermoeconomics, also referred to as biophysical economics, is a school of heterodox economics that applies the laws of thermodynamics, laws of statistical mechanics to economic theory. Thermoeconomics can be thought of as the statistical physics of value theory, economic value and is a subfield of econophysics. It is the study of the ways and means by which human societies procure and use energy and other biological and physical resources to produce, distribute, consume and exchange goods and services, while generating various types of waste and environmental impacts. Biophysics, Biophysical economics builds on both social sciences and natural sciences to overcome some of the most fundamental limitations and blind spots of conventional economics. It makes it possible to understand some key requirements and framework conditions for economic growth, as well as related constraints and boundaries. Thermodynamics ''"Rien ne se perd, rien ne se crée, tout se transforme"'' ''"Noth ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Quantum Economics
Econophysics is a non-orthodox (in economics) interdisciplinary research field, applying theories and methods originally developed by physicists in order to solve problems in economics, usually those including uncertainty or stochastic processes and nonlinear dynamics. Some of its application to the study of financial markets has also been termed statistical finance referring to its roots in statistical physics. Econophysics is closely related to social physics. History Physicists' interest in the social sciences is not new (see e.g.,); Daniel Bernoulli, as an example, was the originator of utility-based preferences. One of the founders of neoclassical economic theory, former Yale University Professor of Economics Irving Fisher, was originally trained under the renowned Yale physicist, Josiah Willard Gibbs. Likewise, Jan Tinbergen, who won the first Nobel Memorial Prize in Economic Sciences in 1969 for having developed and applied dynamic models for the analysis of economic process ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Financial Markets
A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds, raw materials and precious metals, which are known in the financial markets as commodities. The term "market" is sometimes used for what are more strictly ''exchanges'', that is, organizations that facilitate the trade in financial securities, e.g., a stock exchange or commodity exchange. This may be a physical location (such as the New York Stock Exchange (NYSE), London Stock Exchange (LSE), Bombay Stock Exchange (BSE) or Johannesburg Stock Exchange (JSE Limited)) or an electronic system such as NASDAQ. Much trading of stocks takes place on an exchange; still, corporate actions (mergers, spinoffs) are outside an exchange, while any two companies or people, for whatever reason, may agree to sell the stock from the one to the other without using an exchange. Trading of currencies and bonds is largely on a bi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Financial Instrument
Financial instruments are monetary contracts between parties. They can be created, traded, modified and settled. They can be cash (currency), evidence of an ownership, interest in an entity or a contractual right to receive or deliver in the form of currency (forex); debt ( bonds, loans); equity ( shares); or derivatives ( options, futures, forwards). International Accounting Standards IAS 32 and 39 define a financial instrument as "any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity". Financial instruments may be categorized by " asset class" depending on whether they are foreign exchange-based (reflecting foreign exchange instruments and transactions), equity-based (reflecting ownership of the issuing entity) or debt-based (reflecting a loan the investor has made to the issuing entity). If the instrument is debt it can be further categorized into short-term (less than one year) or long-term. ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Mathematical Modeling
A mathematical model is an abstract and concrete, abstract description of a concrete system using mathematics, mathematical concepts and language of mathematics, language. The process of developing a mathematical model is termed ''mathematical modeling''. Mathematical models are used in applied mathematics and in the natural sciences (such as physics, biology, earth science, chemistry) and engineering disciplines (such as computer science, electrical engineering), as well as in non-physical systems such as the social sciences (such as economics, psychology, sociology, political science). It can also be taught as a subject in its own right. The use of mathematical models to solve problems in business or military operations is a large part of the field of operations research. Mathematical models are also used in music, linguistics, and philosophy (for example, intensively in analytic philosophy). A model may help to explain a system and to study the effects of different components, ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
