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On Quantum Ambiguity and Potential Exponential Computational Speed-Ups to Solving Dynamic Asset Pricing Models

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  • Eric Ghysels
  • Jack Morgan

Abstract

We formulate quantum computing solutions to a large class of dynamic nonlinear asset pricing models using algorithms, in theory exponentially more efficient than classical ones, which leverage the quantum properties of superposition and entanglement. The equilibrium asset pricing solution is a quantum state. We introduce quantum decision-theoretic foundations of ambiguity and model/parameter uncertainty to deal with model selection.

Suggested Citation

  • Eric Ghysels & Jack Morgan, 2024. "On Quantum Ambiguity and Potential Exponential Computational Speed-Ups to Solving Dynamic Asset Pricing Models," Papers 2405.01479, arXiv.org, revised May 2024.
    • Handle: RePEc:arx:papers:2405.01479
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    References listed on IDEAS

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