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Caratheodory II: The Geometry of Financial Irreversibility

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  • Bernhard K Meister

Abstract

In quantum mechanics and finance, numeraire invariance - the unobservability of absolute phase or price scale - fits with a projective and curved state space. This projective geometry has a measurable signature. For spin-one and higher spin systems, the Taylor expansion of directed distance contains a non-zero cubic term, which induces a fundamental asymmetry under the exchange of states. The Second Law, the failure of Maxwell's demon, and the limitations of sequential traders can all be reduced to this asymmetry.

Suggested Citation

  • Bernhard K Meister, 2026. "Caratheodory II: The Geometry of Financial Irreversibility," Papers 2603.09966, arXiv.org.
    • Handle: RePEc:arx:papers:2603.09966
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    File URL: http://arxiv.org/pdf/2603.09966
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