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Quantum diffusion of prices and profits

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Edward W. Piotrowski ()
Jan Sladkowski ()

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Abstract

We discuss the time evolution of quotation of stocks and commodities and show that quantum-like correction to the orthodox Bachelier model may be important. Our analysis shows that traders act as a sort of (quantum) tomograph and their strategies can be reproduced from the corresponding Wigner functions. The proposed interpretation of the chaotic movement of market prices imply that Orstein-Uhlenbeck corrections to the Bachelier model should qualitatively matter for large $\gamma$ scales. We also propose a solution to the currency preference paradox.

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Paper provided by University of Bialtystok, Department of Theoretical Physics in its series Departmental Working Papers with number 12.

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Handle: RePEc:sla:eakjkl:12

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  1. Edward W. Piotrowski & Jan Sladkowski, . "Quantum Bargaining Games," Departmental Working Papers 5, University of Bialtystok, Department of Theoretical Physics. [Downloadable!]
  2. Edward W. Piotrowski & Jan Sladkowski, . "The Thermodynamics of Portfolios," Departmental Working Papers 2, University of Bialtystok, Department of Theoretical Physics. [Downloadable!]
  3. Edward W. Piotrowski & Jan Sladkowski, . "Quantum Market Games," Departmental Working Papers 3, University of Bialtystok, Department of Theoretical Physics. [Downloadable!]
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  4. Edward W. Piotrowski & Jan Sladkowski, . "Quantum-Like Approach to Financial Risk: Quantum Anthropic Principle," Departmental Working Papers 8, University of Bialtystok, Department of Theoretical Physics. [Downloadable!]
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