Can the decisions, personal ties and politics underlying society be understood mathematically? And do irrational choices make sense when viewed as uncertain, quantum like probabilities?
Andrei Khrennikov and Emmanuel Haven discuss their research into the quantum formalism behind political movements, financial markets, and personal relations.
- Quantum Mechanical Pragmatic Rules and Social Science (2019): https://doi.org/10.1007/s41470-019-00036-1
- Introduction to quantum probability theory and its economic applications (2018): https://doi.org/10.1016/j.jmateco.2018.08.004
- Statistical and subjective interpretations of probability in quantum-like models of cognition and decision making (2016): http://dx.doi.org/10.1016/j.jmp.2016.02.005
- ‘Social Laser’: action amplification by stimulated emission of social energy (2015): http://dx.doi.org/10.1098/rsta.2015.0094
- An Application of the Theory of Open Quantum Systems to Model the Dynamics of Party Governance in the US Political System (2013): https://doi.org/10.1007/s10773-013-1931-6
The following transcript is automatically generated.
Hello, I’m Will welcome to researchpod.
The ties that bind people and society are almost infinitely complex, with relationships to others on a group level or decisions made on an individual level. Keeping the system in constant flux.
The last decade especially have seen a tide of social protests sweep the globe, often facilitated through social media.
Can the relationships, movements and politics underpinning society be understood mathematically and boring from the cutting edge of mathematics? Can they be modelled using a quantum formalism?
Today I’m speaking with Andrei Khrennikov and Emmanuel Haven about their research, viewing society and economics through a quantum lens.
Doctor Khrenikov Hello, thank you very much for your time today. This is maybe a little bit of a big question. How would you describe what it is that you do?
00:01:10 Andrei Khrennikov
I think I found the impressive coincidence between descriptions of quantum nature and functioning of our consciousness. So it looks like the loss of microvolt and the loss of our brain functioning. They are very similar and I want to model this similarity as far as possible.
00:01:38 Andrei Khrennikov
New 21st century landscape is mainly related from my viewpoint to the tremendous development of quantum information theory, so it is development of knew fruit of quantum physics because before quantum physics was mainly about material properties of or radiation, but formalism of quantum physics is about information processing, and I think this new tool describing confirmation process in case one of the.
00:02:11 Andrei Khrennikov
Biggest stars on the scientific landscape of 21st century. From another site. It’s about human brain functioning becausr. Roughly speaking, we have two main mysteries. The mysteries of quantum theory and the mystery of how our brain produce subjective experiences, how it produced feelings. Reasoning can soon.
In how long it take? Nobody knows. Maybe during the whole century. I hope they, at least at the end of the 21st century, will unified these two theories.
00:02:49 Andrei Khrennikov
My idea is hvn show, understand brain functioning. Can our decision-making through quantum information processing?
Of course, this is my very, very personal perspective to development of science. Other people have completely different picture.
00:03:08 Andrei Khrennikov
Again, is my very personal picture is that when people discovered quantum mechanics discovered theory, not not just experiments where they have seen some phenomena.
They discovered a suit which is much more general than people sorted the beginning, so this is not just how behave electrons an photos.
How behave radiation? But this Siri is about really the most general information processing which can be described by means of some theory, and this information processing from my viewpoint is not related so much more to physics.
00:03:49 Andrei Khrennikov
So the careers of informations are not so important. Also the mainstream of quantum information is still save. You can cone quantum physical carriers on quantum computers and quantum cryptography and so on.
I am not in this stream. Yeah, I think that this is just very very special stream of quantum information. I look to quantum information and general laws. How information can be processed by. Any creatures in the nature living nonliving answer.
So I think we should speak not mainly about physics, but about formalising which was discovered discovered in this physics and can be used in many many other domain of science.
So moving away from if we have the 20th century where you have the physical sciences and the radiation that things that you know exist or can be measured using physical scales, then quantum landscape is like you say, the information processing being much more what we understand and how we understand it.
So to connect the 20th and 21st century moving from classical probability into quantum uncertainty, are there any thought experiments? Any examples in kind of media or in storytelling that they might be able to think of, like a paradox that might be in essence a quantum system?
00:05:23 Andrei Khrennikov
Does exist similarity similarity in these things and these similarities in the very simple phenomena in the interference of probabilities?
So what is meaning of interference an? It’s a first we go to physics. So now we are in physics.
Meaning of interferences. The following all. We have heard the basic experimental quantum physics is very simple. We have the source for example of photos and electrons.
00:05:52 Andrei Khrennikov
They fly to screen which has two holes and then they go through this horse and approach the registration screen.
Which is covered by photo emulsion. Anwen electron hit this registration screen. There is a black dot.
And if electrons would be just some metallic balls, if you open one hole and consider how many electrons would pass an open another, we shall see.
00:06:22 Andrei Khrennikov
The sheet is just if they go to the same area, the number will be just increasing because through two holes can come more electrons then through one hole.
But in reality it’s not the case. It can be assessed by opening 2 screen. We can see each other will some area which was with black dots a when one hole is open, the doors can disappear.
So this is destructive interference in other ways can be in a constructive interference which probability can increase, so this is demonstrated very well in quantum physics.
00:07:03 Andrei Khrennikov
What is in decision-making? They have similar sinks. They each roughly speaking. It’s the main point is such the law of additivity of classical probability is violated both in quantum physics and decision-making.
So this was my point where I started, so I saw that in quantum physics the probability of two events we suggest just joined and in classical probability should be the sum of probability.
In quantum physics, is not the sum. It can be larger or smaller than the sum. The same happened in classical him in classical decision-making.
00:07:44 Andrei Khrennikov
Violation of agility of probability was demonstrated in many, many paradoxes, and for example one of them as Ellsberg paradox.
And if we describe it in this way as I thought they changed the probability of this junction is not the sum of probabilities.
It would be a bit long discussion, but roughly speaking this is the following. Think that people in some way.
We will see in many decision-making they prefer short and small probabilities, then uncertain large probabilities. For example, I know that she is very very small probability. I can get $10.
But this someone very big concert.
And she said, we will say to be something that probabilities which I get $10 will be.
00:08:39 Andrei Khrennikov
50% but uncertainty for this is very big, so I always prefer to get small money with maybe small probability but concrete definite. Then in situation of uncertainty maybe get big money. So this is so cool. It Ellsberg paradox, and it cannot be described. If we accept this additivity of probability.
From my viewpoint there no paradox in quantum theory, so this, again my private viewpoint because majority of people who works in quantum physics and quantum foundations, they emphasise that it is very exotic, very mystical Siri, the Siri which has some very strange phenomena zone. For me, quantum theory is not mystical to Sano paradoxes. It’s very natural theory.
00:09:29 Andrei Khrennikov
And this series, based on Bourse complementarity principle. So boards, complementarity principle, was very simple. He told. So, while we should have been able to measure all physical quantities jointly, while we can observe, for example, at the same time, position and momentum, of course, it can be strange if you compile this classical physics, but maybe small strange station Quan in classical physics weakened.
Do this so the main property of quantum physics is formulated very simply. This is bore complementarity principle in the talus exists quantities, which we cannot observe jointly, and it’s clear why becausr some quantity is measured by one apparatus, another by another.
An appropriate dose is appropriate as there is no reason why we can be constructing you apparatus which we able to measure. This two quantities.
00:10:29 Andrei Khrennikov
Home maybe example the more generally the role of apparatus is played by environment and for example might be I have you can observe my behaviour in one environment in the town and we can observe my behaviour in another environment in village.
But we cannot make something which combine the properties of town and village and see how I would behave in this new environment. So from this viewpoint it’s very clear said.
Sure, I mean not all environments are compatible. Not all observable Sir compatible, so this is was more or less the viewpoint of Neils Bohr, Heisenberg and all.
00:11:10 Andrei Khrennikov
I can say old school of quantum physics in some way. I belong to this old school quantum physics and I tried to deny all this modern viewpoint to quantum physics, which is full of mysteries, nonlocality, action at the distance, and all these sins.
Because in our applications to human cognition, we don’t need this because what would be.
A non locality in human cognition, it would be part of psychological phenomena. So when two guys, one in New York, another in London, would take communicate through action at the distance
We don’t need this, therefore one of my aims and I have a lot of papers in quantum foundations because I work not only applications to cognition and so on, but in real quantum foundation.
00:12:04 Andrei Khrennikov
I have a lot of papers which are devoted to demystification of quantum mechanics that quantum mechanics is not so mystical as many people try to sell it, and it’s clear why they sell.
It says mystical because it’s easier to get money to easy to get recognition for mystical, since then just tell, OK, we have one apparatus, opposition, another former MTM and we are not able to construct the same apparatus which would measure position and momentum.
So this is okay. So is again my private, very private. You point to quantum physics.
Coming back to the kind of the gambling metaphor that you use there that the quantum probability decision-making process goes beyond the constraints of what many people kind of want to try and classify into daily life, but is still how they experience and make decisions in daily life.
00:13:05 Andrei Khrennikov
Roughly speaking, the problem is in classical decision-making. The problem is between theory and real experiment.
Is it in theory? In theory was based on classical probability an it come to such consequences which really are violated? Because what now? Because water theory correctional.
Is not so rational trio’s, for example, financial market or in game theory of real people, but it’s formalised this rational in classical decision-making because it’s based on Bashan. Update of probabilities. What is bashan? Update of probabilities, it’s.
I am to waste coming this beginning of my story that we cannot measure jointly position and momentum of quantum.
00:13:57 Andrei Khrennikov
Michael Ithi consider conditional probability in classical probability theory is defined as some fraction. An laminator of this fraction. So for example, if you’re interested in conditional probability of event A under the conditions that she wouldn’t be happen, then eliminators there should be the probability of conjunction such both events happen. So we have that even a happen and even be happen.
00:14:29 Andrei Khrennikov
Mission is impossible in quantum mechanics. We cannot tell that you’re interested, for example, in quantum mechanics we are interested in probability that we measure such electronics in this point.
This is even B position and now they are interested. What is momentum of this electron? This we can do by using quantum formalism, but we cannot construct the probability of conjunctions such electron wasn’t this point and electron has this momentum.
The same happened in decision-making. Very often we have two events, and we want to consider one condition and cone another, but.
Probability of, say construction is not defined. People cannot construct or. What is maybe more interesting, they don’t have time, they are not able to construct this construction because for example they have time constraint or computational resources constrained.
So the use of quantum probability is easier for people and very often in real life people really use quantum probability and not classical.
And I suppose the work that you’ve done around the S atom model and social laser to kind of unite the physical model of electrons and protons with putting that into the social experience.
Social movements of protests of decision making as a group and affecting a large group of people that makes sense to try and connect those two together.
00:16:04 Andrei Khrennikov
Yes, this is a very recent welcome. There maybe just him because this whole topic of quantum like I can call this quantum like modelling of decision-making kiss. Very long kiss already practically 20 years, but this related to social laser maybe last five years.
And it’s very important to the present situation in the vote where this social lasers work in many countries as they happen even in the United States, this protest and throughout the vote so now vote is really shaking.
I should tell in few years how the usual laser work.
Real physical laser. It is based on interaction of atoms and electromagnetic field.
So this active medium, which is composed to physical items and for simplicity let us consider items which have just two levels ground state. It is relaxed and excited state.
No, we should bump energy in this active medium, so becausw typically items want to be relaxed. Majority of items they want emit photon and go to the ground state.
But if we pump energy with the help of electromagnetic field, we can its approach the situation which is called population inversion when majority of atoms become excited.
This is good moment to start to start stimulated emission, simulated emission, such in this active medium where majorities in the state of excitement.
00:17:44 Andrei Khrennikov
We send some batch of photos which are flying in the same direction and then they say property of interaction of atoms with electromagnetic field that if they see that.
Near at home is flying photon in some direction. 8:00 AM this some probability will also emit photo which will fly in the same direction.
So from one photon we get 2, then they interact with two atoms and say also emit two photos. Then we get 4. So this is cascade process.
In a few seconds there will be a lot of photos, and it’s also the property of quantum field that if it’s if density is high, the probability of atoms to emit photon is also higher.
So we get coherent flow or photos in the same direction, which can side with this initial flow. Now we go to people, people will treat this social atoms ground state or the state of excitements. So In the more developed model it can be more levels of energy.
00:18:57 Andrei Khrennikov
So this active medium who pumps energy in this humans active medium mass media. But now this mainly social networks.
So social networks, which are based on YouTube on Twitter on Telegram and many other channels. So people got social energy. So they have a.
Maybe a million of people who are in this state of excitement and now it’s very important that it would be put some of law of social expectations in One Direction.
So handsome cascade process will start, but of course such flows can be generated spontaneously. Then we shall get menu, minium flows, many beams of social actions in many directions. It will be no big protest.
00:19:51 Andrei Khrennikov
What is important is against social networks. They play what is cooler than usual. Laser laser is a nature.
So when this active medium now I’ll go back to physical laser. This active medium it’s typically placed between two mirrors, and when the first being generated by active medium approached, the mirror is reflected.
But if it reflects alone kids main axis, there can be many photos which go not along this main access.
To save, you’ll be just reflected outside of this of this lesser resonator, and disappear, so after few reflections he will be only in the beam photos which go in the same direction.
The same is played by social networks by so called Echo Chambers. So who chambers also reflects all these actions which are not in this mainstream? And finally, this is just One Direction of social actions.
This what I call social leisure. It is interaction of people who are considered the social items and who is the field filled. This information field information few generated by a mass media and social networks.
Would it be too controversial or maybe too big a topic to think that a echo chamber, a resonator in this example, if we have the theory of how peoples excitation comes about through social networks through media, can we target something with that?
Is that social engineering at that point?
00:21:36 Andrei Khrennikov
Yes, I think social engineering code if you can. This direction. Of course. People who do this, they don’t declare as it.
They construct social laser, but more or less all these principles are used and it was also historically very often social movements and revolutions were created in this way, but now this is became very easy.
So because nowadays we have Internet and we have social networks. So these scenes which before for example pump social energy.
It could take many years of propaganda and so on and so on. Meeting sansone. Now it can be done in a few hours because people are coupled to social network and say immediately react to some news and this news can generate energy in the same way because people are also complete.
To this echo chamber, it is very easy to make concentrated use in One Direction.
00:22:38 Andrei Khrennikov
What is very important that this loss of I can say quantum information theory should start to York?
Full stop full quantum physics is based on Indistinguish ability, so items are indistinguishable. Of course people are distinguishable. We have colour of skiing, somebody’s mail, somebody female, somebody’s Russian, somebody’s German and so on. But in this situation with relation to this, for example social network.
We are very often indistinguishable. So very often we even don’t have names. We use nicknames and people interact in very similar way.
Is atoms interact with electromagnetic field so people don’t ask everybody about his identity card? Who is he? His background is and so on.
If people would do this, it will be classical information processing. Then people would not approach this stage of Generation of this coherent flows of information.
So the more we identify and the less uncertain it becomes and the less role of quantum can play in its predictability.
00:23:57 Andrei Khrennikov
Correct precisely correctly, you formulated even better than I. Yes, this is the essence. Maybe here coming quite. We don’t identify now situation so well.
I think the great role is played by information overload.
Of course it’s not my discovery and so many people who works in psychology, social science they absorb such. Now people are really overloaded by information because we get much more information than it was before.
Now before I got just one newspaper and read your pages and it was enough. Now we get information from a lot of sources or many sources.
00:24:41 Andrei Khrennikov
Probability theory, both classical and quantum, are closely related to logic and more less classical probabilities based on boolean logic.
The logic where we have operation of conjunction exemption and negation and for example, our computers. All our systems which are around us all into artificial intelligence and we buy ourselves. This is classical logic. This is classical reason.
Where we construct all this deep analysis of information where for any two events we construct conjunction of these events, we construct disjunction negation Ann soon. So this is classical logic.
Quantum logic quantum probability is based on quantum logic, where we don’t do.
00:25:30 Andrei Khrennikov
This quantum logic is collection of many many Boolean algebra which has some overlap but which are very different. And what is happened with people they are not able now construct because complexity information complexity of the world.
We cannot construct the general Boolean algebra which classic Lee described. All situation around us and we construct just some sector, some small Boolean algebra, WAVY leave and this is.
Also, the problem of modern SoC becausr this is polarisation of society. Again go to social life.
00:26:09 Andrei Khrennikov
In many societies, American Society is so called dysfunctional. Disagreement society can be polarised and people can be in very, very antagonistic views and why it’s happened.
Because all these people have now this very well informed. For example, if you have some total it our society in this society just problem is information because information is hidden.
Now, for example, in American Society, both supporters of Trump and Biden, they’re all very well informed or information is present.
00:26:43 Andrei Khrennikov
The problem is, these people cannot construct the general Boolean algebra. Those who follow Trump, they construct their own Boolean algebra. Those who followed by, then they construct their own Boolean algebra. This is also a big problem and.
My pictures from cow want a viewpoint. It would be more and more.
In our society, precisely because we don’t use more classical logic, we don’t use this general Boolean algebra. We don’t try to construct conjunction disjunction of all possible events.
00:27:18 Andrei Khrennikov
Maybe here you are right, just people who are from different sub algebra they should try to construct the general algebra and try to make decisions inside this algebra as a voice it can be more and more polarisation.
Of course we cannot now process information with. Details are very often we pray now, president formation by just using labels.
For example, when we see some cat astrophe more level, we just eat the label catastrophic. We are not so much interested example. We researched the train in India about catastrophes, train in India, it is just label. We got social energy because it’s very terrible event.
But of course, nobody of us has time an interest to study. Who were these people who die ways happening soon?
00:28:14 Andrei Khrennikov
And it’s not only about India, it’s about many, many events because we are really overloaded by information. And in this state of.
Ohh no overload of information. It’s profitable to work this uncertain information for you. Quantum theory. This uncertainty is represented by super position. So for example says to two persons Bob and Alice.
In classical Bob loved Alice or he does not love Alice. But in quantum he can be in superposition that he loves and does not laugh, at least at the same time. And in this modern life, for both may be easier to live with this superposition know they are just in the city as they do not married.
They are not just the big family will build family, they’re just in superposition, love and not love. And he processed this sick.
00:29:14 Andrei Khrennikov
Nation of course. At some point he should maybe make measurement to decide, and it would be measurement as in quantum physics, and this superposition sign many fields of our life because there are so many problems because it’s so much information that we simply don’t have computational and time resources to construct very consistent picture of the world. So picture is very inconsistent. But what we can do, we should process information.
At least in this way, so this is roughly speaking, this is the problem of collapse of wave function.
Moving from existing in superposition of love. Don’t love in to agree to disagree statements with the same collapse. Be inevitable there.
How long can a superposition of agreeing to disagree on sometimes very important topics be maintained?
00:30:11 Andrei Khrennikov
It is related, of course. Everything in quantum physics is based on the existence of superpositions, but they can express their presence in different ways.
Yeah, so they agree on disagree.
It’s the famous theorem of Auman. He got Nobel Prize in economics and decision-making cancel.
Suppose there two decision makers. They have common knowledge about each other decision’s so common knowledge is not just knowledge, it’s more complex notion.
So of course I know who’s there again. Alice and Bob. I know about decision’s of Alice and Alice know about decision’s of Bob, but also Bob knows that area Snow.
Most which he knows about, her decision’s an so on an up to Infinity so this is called common knowledge.Of course, typically it’s just few levels of this common knowledge. I used another assumption of our man was that they have the common prior probability.
00:31:20 Andrei Khrennikov
Tribution, so for example, there are two agents, Alice and Bob. They both know the situation at the financial market. They have prior probability distribution for financial market and then they start to make some decisions about to buy shares or not buy shares and they have common knowledge on their decision’s. Then its looks which home answering.
Till they should soon or later come to agreement that they should have the same viewpoint to buy this share or not buy.Into this is so seldom, which is very famous, but from the very beginning people sees it. It’s not the common case.Very often innocent Bob don’t come to agreement. They have different viewpoints to buy these shares or not bye.
00:32:10 Andrei Khrennikov
Why is hip and no typically people until OK? One of the assumption of Almansa RIM can be evaluated. For example, people do not have common priors. Somebody can have insider information and another does not have. But it’s not so general case. More less. Now O people have all information about financial market.
Zen common knowledge. But now these people communicate so easily said they see is actions, so it seems like this assumption is an easy violated.
00:32:44 Andrei Khrennikov
But all my surname is his hidden assumption that these two guys are rational, because if they’re irrational, of course they would not come to agreement.
But what is rationality? In classical decision-making, this is this Bashan. Update constructing the picture when each two events have construction, so we can assign probability to conjunction of any two events. So roughly speaking, we can measure both position and momentum. We can make it.
Picture, for example, one event is a picture about this share and another event is about another share, an indie.
Classical model which is used by Allman. Each agent can make a picture of both shares that how they behave in future.
So in quantum model we don’t have this idea that shame, we have Bayseian update and if update is not, then we see how it can be violated in violation.
Again, have this interference term, so this special term which gives us this merger of disagreement between these two agents.
Let’s hear now from Emanuel Haven, Andrei’s collaborator and Co-Author, who begins with some clarification on the difference between quantum and Quantum Like modelling.
00:34:09 Emmanuel Haven
So Andre mentioned the quantum like padding and that’s kind of important because if the often is misunderstood here in in this sort of work we do is that we may be using problems in society as sort of test beds where we want to use quantum mechanics to solve problems.
In a certain sense, that’s true, but you have to be very careful. There is really no indication and absolutely no reason at all to believe that freedom microscopic environment you’re working in SoC economic phenomenon that those things are exhibiting quantum phenomena. They’re not.
The idea here is that basically when we talk about a quantum like padding is we say well you don’t have to search for any quantum physical process in the microscopic world.
00:35:05 Emmanuel Haven
What you do is you use a quantum formalism as operational formalism, but we are not in anyway saying that any of the phenomena we would be studying in the microscopic world are exhibiting quantum physical processes.
The decision-making paradoxes, Andre discussed. We are actually using quantum probability to accommodate those frequencies observed frequencies.
But quantum probability is not your only probability approach, which.
Potentially do that. There are other generalisations of probability which can do that to the decision-making paradoxes on Sunday was talking about there is no implication here that those things have sort of a quantum mechanical flavour.
I don’t think that’s that’s really what it is, it’s it’s much more that we use the formalism as an operational form.We try to see how that formalism can enrich information out of the problems we are trying to study, but it’s not implying at all that a microscopic world would be Quantum mechanical.
00:36:14 Emmanuel Haven
If you want to use that formalism of quantum physics to describe the processing of information.
Then you do it this to whatever system it pertains to, whether social, financial, or whatever microscopic system it may be.
The origin of this approach is sort of steeped in the idea that quantum information indicates that the quantum wave function is informational in nature and from there. Then you say, well, if I’m now using. Nap formalism of quantum physics to describe this processing of information.
00:36:49 Emmanuel Haven
I’ll say I’ll apply that now to whatever system it pertains to weather, social, financial, or anything microscopic.
That’s sort of the starting point. Again, it’s not at all implying that the macroscopic world would be quantum mechanical. That’s that’s not. That’s not what it says at all.
Think of simple examples, like for instance, if a toilet process made toward process could be if you wish, could be formalised as a superposition of ID states.
The price of an object, it could be seen as a superposition of value states, so I can have an object and I can have different value states. I attached to that object and I can see the price as a superposition of those value states.
00:37:39 Emmanuel Haven
So you’re using this simple formalism to describe Porta formalise some problem setting in a macroscopic setting, but but you’re not saying that economic process is wonder Mechanical. By saying that prices, super positional value states.It’s important also that people realise people who are very new to this realise that this is not something which is completely coming out of the.
The idea of connecting in the quantum mechanical formalism was already done in the 1950s.
It was already done by no less than a Nobel Prize winner in physics. Wolfgang Paoli, who actually looked at the interaction between, believe it or not, consciousness and unconsciousness.
00:38:25 Emmanuel Haven
He tried to argue that this interaction between consciousness and unconsciousness could be analogous to a very well known principle in quantum mechanics called compliment.
Bertie said there was an impossibility to distinguish between behaviour of an atomic object and its interaction with the instrument observing it.
Then office listener should be very careful if you’re very new to this domain. I don’t want to portray this as if already in the 50s it was happening and therefore there was sort of a deep wide activity already flourishing around. The ideas we are trying to portray in this podcast. That’s not really completely true either.
00:39:05 Emmanuel Haven
The sort of analogies between physics and social science has had up and downs. Put it this way.
But it’s important to stress. This is not mainstream, certainly not of economics, I mean.
What we are trying to do when we try to use the operational formulas or the quantum formalism to do economics and finance.
00:39:28 Emmanuel Haven
Is we really try to use two objects of importance in both actually quantum mechanics and an classical mechanics on classical mechanics, you’re going to have what we call a real potential.
It’s a it’s a core ingredient in what we call Hamiltonian dynamics, and I’m between formalism next to what we called the kinetic term.
But of you potentially is also important in quantum mechanics. And then there’s another potential which is called quantum potential, and that really plays only only a role on the mechanics.
What we are trying to do here is to use those two core elements to actually fine tune or two to unpick public information in in financial decision making.
00:40:16 Emmanuel Haven
Decision makers need information and that information is of two main sorts. Either it can be public information or private information.
What we were doing here, what we’re trying to do here. Since we were trying to unpick public information with the eight or the help of those potential functions, I was talking about.
So this idea of real potential and quantum potential as it can be connected to economics is an idea which we have tried out with real data.
One of my ex PG students and myself said it will delta where we use that ruled out as an input to devive the functional form of real potential and quantum potential. So basically the idea was that we were looking at commodity prices.Which were sourced from a database. We will look at commodities, which I think it were gold. Copper and silver was in there too and we looked at daily returns.
00:41:21 Emmanuel Haven
Of those commodity prices. So you can imagine that if you look at the number. Which notes the daily return should be very very small.
That’s quite obvious. So what we did is we we estimated a real potential from those daily returns, and we also estimated a quantum potential from those daily return.
So to think of the real potential which I mentioned to you is is sitting in classical mechanics as it is also sitting in quantum mechanics of your potential.What you should be observing intuitively if you use this on your financial data is you should be observing that there was a sort of an equilibrium point. And at equilibrium point is a point which is the most likely.
00:42:02 Emmanuel Haven
And that point in that real data is a point which is close to 0. Write the daily return on commodity should be very very small.
So you have to sort of imagine that the real potential is a sort of a curve, and equilibrium points around zero, and then fairly steep walls right around that’s zero point, which sort of go up, and which indicate that basically, if you were to think of a little particle rolling on that function, it has absolutely very little staying power, so stay on on any of the walls, because it would fall down into the equilibrium position all the time.
So I’m picturing a line graph with a very tall U shaped curve around 0 on kind of the negative and positive side dipping down from on high, touching 0 and then swooping back up very steeply again. Is that right?
00:42:53 Emmanuel Haven
Yeah, and that’s also what intuitively you would get out of applying this to real data. In other words, you would have to find a very low likelihood of occurrence of any daily return, which is far away from zero.
And that’s clearly what we found. Of course, that corroborates certainly that that the estimation of your potential from daily return data corresponds to the intuition we would expect to gain from that.
Now if you look at a quantum potential, is just basically coming out of the idea of using the polar form of the wave function. You put it in the trading equation.
And then one of the equations you get out of that will contain a term which next to the real potential is the so called quantum potential.
This is an interpretation of quantum mechanics, which which is also known as as hidden variable or booming mechanics.
If you use commodity returns an you estimate quantum potential from those commodity returns, you will see that you get a quantum potential which actually doesn’t have an equilibrium. It’s basically what we call a sort of a square.
00:44:02 Emmanuel Haven
Well, when you have a bottom part of the potential is is fairly flat and there is no real equilibrium position.
The walls of the potential coincide very much with the vertical parts of the real potential.
So it means again, that’s anything which falls way outside of a zero daily commodity. Return is very unlikely.
If they were true, instructor jump well out of range, there is a sort of a strong negative reaction for it which pulls deals between us back.
Whether we look at the force arrived from the quantum potential will whether we look at the force device from the real potential those forces bring it back, the returns are kept within bounds.
And what you’re going to see is that if you look between the walls of the potential mind, if you look within a shorter interval of 0. So sort of what we would call in range values.
00:45:05 Emmanuel Haven
What you see there is that the gradient of the force associated to the real potential is going to be larger than the gradient of the forces associated quantum potential, and that seems to indicate.
There is maybe what we in economics like to call an efficiency argument in finance, which we could associate with real potential.
This hard financial data sort of argument as opposed to the speculative non height financial data. Psychological social information which we could associate with a ponder potential. So if you go back to what we were saying at the.
00:45:41 Emmanuel Haven
When we started talking about that, we were trying to unpick public information. Well, that’s exactly what we’re trying to do here.
We’re using those two types of potentials we see they have different interpretations as relative to to the forces they portray.
And those different behaviours they portraying from that real data seems to indicate to us that we are looking at public information.
But we are dividing that public information in in two types of information long which links to the real potential one which links to the quantum potential.
Well, you can also see and that’s something my ex PSG student and myself looked at in a paper which we published in a physics journal is that you can see that the correlation between the forces.
00:46:28 Emmanuel Haven
Within that range of feasible returns.
The correlation between those forces is also not high.
And that again shows you that you probably are dealing with two different types of information within the setting of public information.
A set of information which is associated with the real potential instead of information which is associated with the quantum potential.
Basically what we seem to see is pretty intuitive. For instance, one of the things you you can see is that the distance between the walls for those quantum potentials estimated on major stock indices is consistently larger for stock indices of developing markets as opposed to development.
00:47:16 Emmanuel Haven
Another intuitive finding is that if you look at the distance, you’ll see that the wall distance is going to be larger for emerging industries as opposed to for instance in the system which are captured in the Dow Jones, for instance. So again, pretty intuitive.
It’s it’s interesting that you get to sort of results by just using those potentials. Those type of potentials, and that it’s so intuitively appealing.
There is an additional very important, potentially promising element here to the set up, and it really relates to again both potentials and it’s the ideas that you can put.
The gradient of the real and quantum potential. The forces within what we call an extended second law of Newton equation an that leads us to.
00:48:13 Emmanuel Haven
The construction of pets so you can actually construct trajectory’s which are this sensitive to changes in either of those two potentials and that can be potentially extremely interesting, because if I can construct paths which are sensitive to changes in those potentials, then basically what I’m trying to do here is actually I’m emulating a change in information.
Changes in information would affect the path we are constructing out of the forces which are divided from those two potentials and that can be potentially very interesting.
Is this something that can only be applied retroactively looking back over a certain period of time, or can it be done more actively?
00:49:01 Emmanuel Haven
So that’s a very interesting question. Well, it’s also very tough question to answer because basically what you’re saying is can that modelling approach be used to predict prices can be used.
For instance, is bad approach to do that, but I think unfortunately I think that’s probably going to be a very difficult thing to do.
I think at this stage I mean maybe it will be in the future when we can fine tune it even more, but at this point in time I doubt it.
Within the financial setting of any deviation, outliers that might throw things off.
00:49:35 Emmanuel Haven
So this is a very good question also. So you would want to see if for instance those calculations if we were to do this on weekly returns or monthly returns, you would want to see if you’re going to get different types of intervals for that steepness, right? Because if you’re going to get again the same sort of steepness around 0.
For monthly returns and there was something which wouldn’t be working, I think we could do that easily, and I would suspect that we will find indeed that that you’re going to get again your walls coming up further way, way, way further away.
I think it’s probably intuitively gonna be acceptable course looking at, for instance, the the wall distances on NASDAQ returns as opposed to Dow Jones returns. You get exactly what you would expect that as you would get wider wars.
00:50:32 Emmanuel Haven
Did theoretical approaches actually capturing from the data actually what intuitively would expect?
We again as I said we haven’t done it on monthly not or by yearly data.
In the end, what it all is about is is basically improving on existing formalisms.
So as I mentioned, and we would also agree with that, I mean, the quantum formalism is an operational formalism. Again, we’re not implying at all that the microscopic environment is quantum mechanical.
It’s a formalism which is trying to enrich or improve upon the modelling. So what I’m saying, for instance with information example I was mentioning just a few minutes.
00:51:17 Emmanuel Haven
People should not get the wrong idea. Modelling of information has happened in economics. It was that this has happened over many years.
It’s it’s to see whether, for instance, approach we are proposing with those potentials can improve upon that modelling.
But the whole idea of what Andre was saying about decision making, for instance an resolving or accommodating the paradoxical behaviour or the frequency is observed through all the experiments which have been done on on on that repeated observation of paradoxes.
It’s a formalism which can accommodate it.
The question becomes will how you interpret it right if if the quantum probability rule allows me to accommodate those observed frequencies. The next question then becomes in the quantum probability rule.
The angle you get within the interference term is what from up psychological point of view. What does it mean?
And that’s a very difficult question to answer right so?
00:52:21 Emmanuel Haven
If I tell you that, okay, the quantum potential seems to measure a different aspect of public information. Yeah, okay, but what is it? Can I put my finger on that specific aspect of public information that I’m measuring?
Can I term it can I can I put a label on that and that’s hard to do?
And I don’t think we are there yet.
So it’s great to say that within public information, for instance, I’m capturing something.
Out of this quantum potential, which is different, which is. But I can’t put a label on it.
00:52:58 Emmanuel Haven
You see, I cannot say well, it’s this aspect of public information you’re capturing with the quantum potential. I can guess maybe it’s something which is maybe not hard financial data, but to be very precise about that is is very difficult.
And it’s the same thing in some sense with the decision-making paradoxes under it was talking about when you look at the probability interference too.
00:53:21 Emmanuel Haven
Do you use in quantum probability to accommodate those? The paradoxical decision-making you could ask yourself, the question, what is psychologically speaking?
What is this angle which we have in the interference term in probability in quantum probability? What does that correspond to?
We know what it corresponds to. The angle in the interference German physics. We know exactly what it corresponds to, but you don’t really know what it corresponds to in psychology.
So the difficulty with using an operational formalism is that. You are fine tuning. In fact, the information you are getting out of the different. Concepts are using out of this operational formalism. But it’s very difficult to put a label.
00:54:11 Emmanuel Haven
On what you find is what I’m trying to say.
So it’s a public information example. If I try to uncover or pick what types of public information there there are, and there seems to be different types depending on whether I have this bottom potential and measuring it, or the real potential. But I still have to put a label on that and I don’t really know what the label would be. That’s the problem.
What ongoing work is there to answer some of those open questions if there’s anything upcoming? If there’s any collaborations you’re working on with people that are advancing this in different directions.
00:54:46 Emmanuel Haven
So there is Andre, of course is doing a lot of work, continues with a lot of work on this. Also looking at this. Other approaches to generalisations of probability next to quantum probability, he has done work on that, and I think he’s still working on that also.
Myself, I’m now working on a book with become atali book with Cambridge University Press on on further expanding. Those ideas of omen mechanics approach in economics and finance. So we’re trying to fine tune this.
More, there’s a lot of activity in the area, lot of activity, and a lot of activity which continues to be performed with a lot of other collaborators.
We haven’t mentioned like Jerome Bosom I or editor at a high of other people were very very active in the field and it is a very fruitful field.
00:55:43 Emmanuel Haven
Very interesting field with some people publishing in very very really outstanding journals and we hope that it will continue.
But the bottom line always remains that if you use this operational formalism, which is, this quantum form isn’t the Keating is really to come to a point where you can specifically label.
Something you find out of that formalism an which really has developments to the social science domain you are you looking at, and that’s still very hard to do.
Andrei, for a few final thoughts… I suppose the big question is if someone listening to this once to better understand either their place in a social laser or the place that quantum decision-making has in their lives, is there anyway for a beginner to get to grips with how they fit in a quantum world? Or how a quantum world exists within them?
00:56:46 Andrei Khrennikov
From my viewpoint, we are quantum like quantum like decision makers. Because of course this is serious, which our brain is really.
Quantum machines at our decisional based on quantum physical process and brain, we are not against this, but we don’t need this.
So in any event, it’s look that’s all Siri or experimental data. Tell us. Such brain juice works. Is quantum light decision-making?
Richard V proceeds super positions and two yeah, I think many people can see that she nowadays they really have the picture of the vote, which is based on this which is based on this super positions and this picture of the vote.
00:57:34 Andrei Khrennikov
Maybe it’s not so rational from the viewpoint of autumn day classical decision-making so, but it looks that we don’t have any other possible.
Know, roughly speaking, my message would be that many inconsistencies that we see now in social life in our private life and so on.
They just consequences of this information processing and this information processing look the only possible in the modern society, which is overloaded by information and it will be even more and more information.
Future we will become more and more quantum decision makers in many things which look for us is paradoxical from our old rationality, more or less we should learn to live in this quantum decision-making quote and accept that people behave in this way. So because behaviour would be very different from what it was, beef.
00:58:36 Andrei Khrennikov
Another way is just to try to decrease this volume of information, such as going to us not to reject mobile phones to reject social networks and so on. Then we shall have more time for information processing and we will become more classical decision makers.
But I don’t want to code what we have now really progress, but in any event society developing this way, I don’t see any other possibility because it is clear that people would not reject mobile phones do not reject Internet, do not reject social net.
Books and of course people maybe shoot alone, at least to struggle with this social shaking becauses became very simple nowadays and many people can do this nowadays by using social networks, not only political parties becausr in the United States where accusations between two parties age they use social protest for their own purpose. But recently it was.
A market dealers in the United States. They really use social laser for.
Bump up the price for GameStop shares which were practically zero. It was cascade process. They send this initial batch of messages that prices will go up and this echo chamber, the social network, played the role of ECHO chamber.
01:00:08 Andrei Khrennikov
It started to reflect this until it’s become very high and then people start to buy these shares. Price go up and many big corporations lost money becauses they were they.
Did not play that share the price of shares is go up and it is.
It is interesting field. I think it’s feel skis when this social laser technology was used by the group. The private group of people.
Very small group of people, so it is it is not even political party or state or somebody else and.
01:00:46 Andrei Khrennikov
I I cannot tell such these people do it best sync with shares, but in any event it’s new technology of shaking Co. Financial market not only political landscape but even financial escape now can be also on the big waves. Generated really by just information.
Maybe the answer then isn’t to reject social networks, but to examine the content to examine the information that comes to us as closely as possible to determine as much information as possible, collapse away form and remove uncertainty with classical probability as best as we can.
01:01:27 Andrei Khrennikov
Have you? But we don’t have time if you don’t have time because we are busy on our network. Places where you solve problems which are also very complex, informational and then we come home and we want to so be involved in political and social life and we eat this information. It labels and.
My picture is it if you cannot manage this situation to improve it, it would be a cities. Maybe I’m pessimistic, yeah well.
Oh, let’s all stay at home and only beyond social networks. Let’s all just live there in examine social media constantly.But I think that might not be a very healthy option.
01:02:09 Andrei Khrennikov
Healthy option no, it’s not healthy…