Transactional Interpretation for the Principle of Minimum Fisher Information

TL;DR

This paper explores how the principle of minimum Fisher information can model market transaction processes, linking quantum harmonic oscillator strategies to market risk minimization and information costs.

Contribution

It introduces a transactional interpretation of Fisher information, connecting quantum oscillator eigenstates with market strategies and their information minimization properties.

Findings

Superpositions of oscillator eigenstates can have lower Fisher information than individual states.

Minimizing Fisher information aligns with minimizing market risk.

Different perspectives on Fisher information lead to distinct market strategy orders.

Abstract

The principle of minimum Fisher information states that in the set of acceptable probability distributions characterizing the given system, it is best done by the one that minimizes the corresponding Fisher information. This principle can be applied to transaction processes, the dynamics of which can be interpreted as the market tendency to minimize the information revealed about itself. More information involves higher costs (information is physical). The starting point for our considerations is a description of the market derived from the assumption of minimum Fisher information for a strategy with a fixed financial risk. Strategies of this type that minimize Fisher information overlap with the well-known eigenstates of a the quantum harmonic oscillator. The analytical extension of this field of strategy to the complex vector space (traditional for quantum mechanics) suggests the study of the interference of the oscillator eigenstates in terms of their minimization of Fisher information. It is revealed that the minimum value of Fisher information of the superposition of the two strategies being the ground state and the second excited state of the oscillator, has Fisher information less than the ground state of the oscillator. Similarly, less information is obtained for the system of strategies (the oscillator eigenstates) randomized by the Gibbs distribution. We distinguish two different views on the description of Fisher information. One of them, the classical, is based on the value of Fisher information. The second, we call it transactional, expresses Fisher information from the perspective of the constant risk of market strategies. The orders of the market strategies derived from these two descriptions are different. From a market standpoint, minimizing Fisher information is equivalent to minimizing risk.