Role of Information in Market Price Convergence (half-baked)

NOTICE

• still half-baked: DO NOT TRUST THE FOLLOWING

Basic Ideas

• On applying field theoretic ideas to economics, we must be aware that most of economical information which appears in each transactions or estimations (emission, scattering, absorption or observation of wealth) corresponds to internal states of physical matter, which is experimentally unmeasurable and have no thermodynamical meaning
• Also some properties, which seemed definite in macro-scale, is aggregate (market mean) and turn into uncertain: e. g. relative price (mass)
• Buyers' information about sellers' status can lower the price: it means information (boson) can convey substantial proportion of the price (special relativity assures that)
• Majority in price of rare and inseparable goods is just knowledge about who own them (imagine poker players)
• Such "bosonic" interaction between peers is strongest at cross trade and vanishes in the limit of market participants goes to infinity, as pointed out in Edgeworth's Mathematical Psychics
• Why? In larger market, our weak seller can seek unacquainted buyer who offer "fair" value
• In equilibrium of complete market, total wealth (energy) of system is properly direct-sum-decomposed into wealth of each participants, so Paleto optimal.
• Sellers can manipulate price with fake information in certain degree
• Buyers, who "sell" demand, can also manipulate price of demand
• Such interaction also plays a role in market convergence in its speed and character
• Slow settlement algorithm (like as assumed in classical mechanics) corresponds to no interaction setting: eventual collision between buyers and sellers is only chance of exchanging "momentum", or portfolio
• Consumer markets with ordinary money may converge fast
• Slower algorithm which corresponds to ordinary bazaar with bargaining
• In modern stock market with ticker and some boundedness constraints still have such "off-market" interaction and manipulation is still effective
• In translating various information to money, phase information might be lost. It seems that money behaves like phonons

TODO

• I heard but not confirmed yet that Yasutomi(1995) gives experimental observations on convergence of various settlement algorithm, with and without money and argue emergence of money