Measurement in quantum theory is a key scientific case where one of many possible outcomes comes to pass, the other possible outcomes disappear, and the world continues from a newly-fixed state. In quantum theory, Lüder’s projection postulate constraints the way the state of a system has to change following measurement, an idea which has been multiply employed in applications of quantum theory outside physics, notably in cognition. Recently, Orrell presented an economic model based on quantum theory. We summarise this view, including evidence for its plausibility. Following from Orrell’s ideas, we consider how the notion of a system, measurement, and Lüder’s postulate might translate in a financial context. Specifically, quantum theory predicts a so-called quantum Zeno effect, that is, a reduction that some initial state changes, after receiving various pieces of information all pushing towards change, as the density of intermediate measurements increases. We aim to translate this idea to the financial world and we believe there is an application in the real estate market: Due to the individual nature of houses and the corresponding scarcity of comparable properties, we observe especially pronounced relationships between low liquidity and price uncertainty in the property market. We propose that this way of thinking essentially links low liquidity with volatility and we offer some preliminary analyses substantiating our point.

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Low Liquidity Brings Volatility: Quantum Zeno Effect and Pricing

  • Dominic Widdows,
  • Emmanuel M. Pothos

摘要

Measurement in quantum theory is a key scientific case where one of many possible outcomes comes to pass, the other possible outcomes disappear, and the world continues from a newly-fixed state. In quantum theory, Lüder’s projection postulate constraints the way the state of a system has to change following measurement, an idea which has been multiply employed in applications of quantum theory outside physics, notably in cognition. Recently, Orrell presented an economic model based on quantum theory. We summarise this view, including evidence for its plausibility. Following from Orrell’s ideas, we consider how the notion of a system, measurement, and Lüder’s postulate might translate in a financial context. Specifically, quantum theory predicts a so-called quantum Zeno effect, that is, a reduction that some initial state changes, after receiving various pieces of information all pushing towards change, as the density of intermediate measurements increases. We aim to translate this idea to the financial world and we believe there is an application in the real estate market: Due to the individual nature of houses and the corresponding scarcity of comparable properties, we observe especially pronounced relationships between low liquidity and price uncertainty in the property market. We propose that this way of thinking essentially links low liquidity with volatility and we offer some preliminary analyses substantiating our point.