Physical Modeling of Economic Systems

Reviewer:

DSc S.I. Parinov

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Methods of theoretical physics, classical and quantum mechanics are used to develop classical and quantum models of economies and to derive their equations of motion that describe economy evolution in time, namely, Lagrange and Schrödinger equations correspondingly.

This monograph may seem interesting to everyone who is engaged in research in economics, finance, econophysics or physical economics, as well as to professional investors and stock traders.

This is the first monograph in a series devoted to the development of probabilistic economic theory (Kondratenko, 2005, 2015, 2021). It outlines the fundamental concepts of this theory.

In the market economy major active players (or agents, or subjects), i.e. buyers and sellers of goods and commodities, behave to a certain extent in a deterministic way thus subordinating their behavior in the market to some strict economic laws. The fact that these laws are of a descriptive nature, and they have not yet been expressed in a precise mathematic language, is not of key importance in this case.

Every rational player or market subject acts in the market in accordance with a strict rule of obtaining maximum profit or benefit or some other criterion of optimality for him or her and in this respect market economic systems resemble physical systems where all players, members, and elements of the system act also in accordance with some principles of maximization.

The main drive of our research is that we assume general possibility to develop dynamic models for relatively simple market economic systems consisting of an economic subsystem or simply an economy with a certain number of buyers and sellers and its external environment with certain interactions between economy agents, and between the economy and environment. In this case, it is supposed that it can be performed by the analogy with the method of developing theoretical models of physical systems consisting of a system of interacting material particles in the external fields or external environment [1, 2]. Moreover, it is assumed that equations of motion derived for physical systems in the physical space are quite a good initial approximation for equations of motion of modeled economic systems in some price space.