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Finite quantum mechanical model for the stock market

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  • Liviu-Adrian Cotfas

Abstract

The price of a given stock is exactly known only at the time of sale when the stock is between the traders. If we know the price (owner) then we have no information on the owner (price). A more general description including cases when we have partial information on both price and ownership is obtained by using the quantum mechanics methods. The relation price-ownership is similar to the relation position-momentum. Our approach is based on the mathematical formalism used in the case of quantum systems with finite-dimensional Hilbert space. The linear operator corresponding to the ownership is obtained from the linear operator corresponding to the price by using the finite Fourier transform. In our idealized model, the Schrodinger type equation describing the time evolution of the stock price is solved numerically.

Suggested Citation

  • Liviu-Adrian Cotfas, 2012. "Finite quantum mechanical model for the stock market," Papers 1208.6146, arXiv.org, revised Sep 2012.
    • Handle: RePEc:arx:papers:1208.6146
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    References listed on IDEAS

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    1. Liviu-Adrian Cotfas, 2012. "A quantum mechanical model for the relationship between stock price and stock ownership," Papers 1207.3412, arXiv.org, revised Sep 2012.
    2. Zhang, Chao & Huang, Lu, 2010. "A quantum model for the stock market," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 389(24), pages 5769-5775.
    3. Chao Zhang & Lu Huang, 2010. "A quantum model for the stock market," Papers 1009.4843, arXiv.org, revised Oct 2010.
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    Cited by:

    1. Yaghobipour, S. & Yarahmadi, M., 2018. "Optimal control design for a class of quantum stochastic systems with financial applications," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 512(C), pages 507-522.

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