Bose-Einstein Condensation in Financial Systems

TL;DR

This paper models financial systems as condensates akin to Bose-Einstein condensates, deriving statistical distributions for investments and price moves that align with known financial distributions.

Contribution

It introduces a novel physical analogy to describe financial systems and derives specific statistical distributions from this model.

Findings

Investment distributions follow Pareto distribution.

Price move distributions resemble exponentially truncated Levy distributions.

Provides a new theoretical framework for financial market analysis.

Abstract

We describe financial systems as condensates, similar to Bose-Einstein condensates, and calculate statistical distributions following from the model. The calculated distributions of investments into speculated financial assets are found equivalent to a Pareto distribution, and the calculated distributions of the price moves are found equivalent to exponentially truncated Levy distributions.