Econophysics: Difference between revisions
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'''Econophysics''' and the closely-related field of '''sociophysics''' are areas of interdisciplinary research using methods and techniques from [[physics]] to model economic and other social phenomena respectively. Although examples can be found dating back some way into the literature, both fields came to prominence in the 1990s in response to a number of factors, including perceived crises in traditional [[economics|economic]] methodology and analysis, the interest from the [[finance]] industry in employing trained physicists as [[quantitative analysis|quantitative analysts]], and the complex patterns observed in the newly-available high-frequency financial data, which suggested links to various contemporary developments in [[statistical mechanics]]. | '''Econophysics''' and the closely-related field of '''sociophysics''' are areas of interdisciplinary research using methods and techniques from [[physics]] to model economic and other social phenomena respectively. Although examples can be found dating back some way into the literature, both fields came to prominence in the 1990s in response to a number of factors, including perceived crises in traditional [[economics|economic]] methodology and analysis, the interest from the [[finance]] industry in employing trained physicists as [[quantitative analysis|quantitative analysts]], and the complex patterns observed in the newly-available high-frequency financial data, which suggested links to various contemporary developments in [[statistical mechanics]]. | ||
As well as bringing new mathematical and computational techniques to the table, econophysics represents a considerable conceptual shift in its approach to economic problems. | As well as bringing new mathematical and computational techniques to the table, econophysics represents a considerable conceptual shift in its approach to economic problems. Whereas traditional economics has tended to conceive economic situations in terms of steady states, emphasising concepts such as [[economic equilibrium|equilibrium]], deductive [[economic rationality|rational]] behaviour and [[utility maximisation]], econophysics emphasises the [[dynamical system|dynamical]] aspects of economic behaviour, focusing on [[non-equilibrium thermodynamics|non-equilibrium]] systems, [[bounded rationality]] and [[multi-agent modelling]] where the diverse participants have limited computational capacity. | ||
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Revision as of 18:54, 14 February 2007
Econophysics and the closely-related field of sociophysics are areas of interdisciplinary research using methods and techniques from physics to model economic and other social phenomena respectively. Although examples can be found dating back some way into the literature, both fields came to prominence in the 1990s in response to a number of factors, including perceived crises in traditional economic methodology and analysis, the interest from the finance industry in employing trained physicists as quantitative analysts, and the complex patterns observed in the newly-available high-frequency financial data, which suggested links to various contemporary developments in statistical mechanics.
As well as bringing new mathematical and computational techniques to the table, econophysics represents a considerable conceptual shift in its approach to economic problems. Whereas traditional economics has tended to conceive economic situations in terms of steady states, emphasising concepts such as equilibrium, deductive rational behaviour and utility maximisation, econophysics emphasises the dynamical aspects of economic behaviour, focusing on non-equilibrium systems, bounded rationality and multi-agent modelling where the diverse participants have limited computational capacity.
External links
References
Notes
- ↑ Stanley, H. E. et al. (1996). "Anomalous fluctuations in the dynamics of complex systems: from DNA and physiology to econophysics". Physica A 224: 302–321. DOI:10.1016/0378-4371(95)00409-2. Research Blogging.
- ↑ Galam, S., Gefen, Y. and Shapir, Y. (1982). "Sociophysics: a new approach of sociological collective behaviour. I. Mean-behaviour description of a strike". Journal of Mathematical Sociology 9: 1–13.
Bibliography
- Farmer, J. D. (1999). "Physicists attempt to scale the ivory towers of finance". Computing in Science and Engineering 1 (6): 26–39. DOI:10.1109/5992.906615. Research Blogging.
- Feigenbaum, J. (2003). "Financial physics". Reports on Progress in Physics 66: 1611–1649. DOI:10.1088/0034-4885/66/10/R02. Research Blogging.
- McCauley, J. L. (2004). Dynamics of Markets: Econophysics and Finance. Cambridge: Cambridge University Press. ISBN 0521824478.
- Mirowski, P. (1989). More Heat than Light: Economics as Social Physics, Physics as Nature's Economics. Cambridge: Cambridge University Press. ISBN 0521426898.
- Osborne, M. F. M. (1977). The Stock Market and Finance from a Physicist's Viewpoint. Crossgar Press. ISBN 0964629208.
- Solomon, S. and Levy, M. (2003). "Pioneers on a new continent: on physics and economics". Quantitative Finance 3: C12–C15.
- Sornette, D. (2003). "Critical market crashes". Physics Reports 378: 1–98. DOI:10.1016/S0370-1573(02)00634-8. Research Blogging.
- Stanley, H. E. and Mantegna, R. N. (1999). An Introduction to Econophysics: Correlations and Complexity in Finance. Cambridge: Cambridge University Press. ISBN 0521620082.
- Waldrop, M. M. (1992). Complexity: The Emerging Science at the Edge of Order and Chaos. New York: Simon & Schuster. ISBN 0671767895.