The Physics of Finance

A physicist’s view of finance and economics About:

Defending economists — from themselves

Economists need to stand up to economists who give their field a bad name

I am on occasion a fairly harsh critic of modern economics, for many reasons. I think economists use the concept of efficiency in a slapdash manner. I think they make a fetish of rigorous mathematics even when they gain no insight from it; it’s…

Economic orthodoxy is going down

… even if most economists don’t yet know it

Over the past few years of blogging, I’ve spent a fair bit of time — too much time — perusing the blogs and research papers of mainstream economists, especially in macroeconomics. One thing that I have almost never seen discussed anywhere is the research potential for agent-based…

How to consistently beat the markets: solid evidence

A new study documents predictable patterns in market movements, patterns which have persisted for 200 years. No, the markets are not efficient

A new study brings powerful evidence to bear on a very old debate. The debate has been running for half a century or so, and never seems to end…

Democracy? That WAS a nice experiment

Why democracy is heading for extinction… get ready for elite economic domination

If you grow up in the U.S., you hear from every direction — from the press, in school, from your neighbors and friends— that the U.S. is a model of democracy. It’s the world’s No. 1 democracy, furthering freedom around the world. It’s a…

Why we misunderstand capitalism

Wealth isn’t money. It’s having solutions to human problems.

I think everyone would profit from reading this recent article by Nick Hanauer and Eric Beinhocker, entitled Capitalism Redefined. Hanauer is a venture capitalist, Beinhocker an economist, and they offer a very unconventional view on what capitalism is, how it works…

Why high alcohol consumption is optimal for humans

From Paul Pfleiderer, a brilliant demolition of the way economists create, use and defend their models

Economists often get criticized for basing their models on completely unrealistic assumptions. For example, that people are fully rational and operate with near perfect foresight. That markets…

Taxis 2.0: Streamlining city transport with graph theory

Big city taxi systems could be 40% more efficient with device-enabled taxi sharing

Arrogant physicists — do they think economics is easy?

No. But their ideas can help improve economics, and here’s why

Economist Chris House wonders why so many physicists are drawn to economics. It's a fair question, and it must seem strange -- perhaps irritating -- to see people from a foreign field intruding into your territory, fully convinced that…

The Apple of my ‘i’

“aRe” You Optimizing Your Life, Business & Technology (with Apple products)?

Whenever you click on an article to see whether you want to…

Random oblivious transfer: is quantum secured finance almost a reality?

Why quantum cryptography could soon play a role in our financial lives

Ten to fifteen years ago, I used to write frequently for New Scientist magazine about research progress towards quantum computing. Quantum computing would exploit the peculiar properties of the atomic world to…

The fragile “wisdom” of crowds

Why prediction markets aren’t quite as amazing as economists once thought

A couple of years ago, prediction markets were all the rage. They seemed to provide a mechanism for pooling the wisdom of countless people — by making them put their money where their thoughts were—to make accurate predictions of anything from sporting…

Climate change: what do we know?

A short, sharp review of the important stuff everyone should know 

The debate over climate change is so contentious that it’s a little daunting even to write about. The issues are complex. There is vast uncertainty. Disinformation abounds and emotions run high. I couple of years ago, I wrote an article for New Scientist…

A picture makes it clear: the recession IS over

Not that many people will know it for quite some time

Below are two graphs that show an awful lot about our current economic situation. The first shows that the recession is probably coming to an end. The second that, as we come out of it, only a small fraction of people may benefit.

What’s the use of “econo-physics”?

Why physics + economics = more than you think

About 20 years ago, a few physicists got interested in applying some ideas and concepts from physics to problems in finance and economics. The area is sometimes called "econophysics" – I actually don't like the name – and it tends to be controversial. Some economists find it annoying…

Bio-finance? Why high-frequency trading makes stocks flock like birds

Plus a bonus: enjoy an “awesome” fish video

Economics: we find the truth axiomatically

How economists implicitly assume what they claim to know

Economics: How often do we “lose” decades?

According to actual history, much more often than most economists think

How Google's algorithm could fix the financial system

Computation could make banks’ systemic risks visible to all

About 15 years ago, Google's PageRank algorithm transformed the web by making it much easier to search. An algorithm, cleverly applied, reconfigured a sea of information and transformed the world. That same algorithm, transported and translated…

Can Big Data predict stock price movements?

Probably not.

A few years ago, following the apparent discovery by the OPERA research group of neutrinos traveling faster than light from a source in Switzerland to a detector in Italy, lots of physicists set out to explain how this might occur. One paper by physicist Michael Berry and colleagues was entitled "Can apparent…

“Just so” stories of modern economics

Economists like to tell stories with their theories. They look like the wrong stories…

The physics of finance? 

What this is about

This collection explores modern research that is helping to transform economics and finance, especially through inspiration coming from physics and the other natural sciences. If traditional economics has emphasized self-regulation and market equilibrium, the new perspective emphasizes the myriad positive feed backs that often…

The Physics of Finance
The Physics of Finance

A physicist’s view of finance and economics About:

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