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Quantum Mechanics and Mathematical Economics are Isomorphic. John von Neumann between Physics and Economics.

Luca Lambertini

Published Jan 1, 2000• 5 citations
Publisher

Abstract

A methodological discussion is proposed, aiming at showing that game theory in particular (and mathematical economics in general) and quantum mechanics are isomorphic. This result relies on the equivalence of the two fundamental operators employed in the two fields, namely, the expected value in economics and the density matrix in quantum physics. This coincidence can be traced back to the contributions of von Neumann in bot disciplines.

DOI
10.6092/unibo/amsacta/4939

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Abstract Birkhoff and von Neumann make it clear what the goal of their October, 1936 paper, “The logic of quantum mechanics”, is: “The object of the present paper is to discover what logical structure one may hope to find in physical theories which, like quantum mechanics, do not conform to classical logic. Our main conclusion, based on admittedly heuristic arguments, is that one can reasonably expect to find a calculus of propositions which is formally indistinguishable from the calculus of linear subspaces with respect to set products, linear sums, and orthogonal complements-and resembles the usual calculus of propositions with respect to and, or, and not.” (Birkhoff and von Neumann, 1936, p.823; underline added). Specifically, “Up to now, we have only discussed formal features of logical structure which seem to be common to classical dynamics and the quantum theory. We now turn to the central difference between them-the distributive identity of the propositional calculus: L6: a U (b ꓵ c) = (a U b) ꓵ (a U c) and a ꓵ (b U c) = (a ꓵ b) U (a ꓵ c) which is a law in classical, but not in quantum mechanics.” (Birkhoff and von Neumann, 1936, p.830; underline added) Continuing, Birkhoff and von Neumann comment: “From a deeper mathematical viewpoint, L6 is the characteristic property of set-combination. More precisely, every "field" of sets is isomorphic with a Boolean algebra, and conversely.21 This throws new light on the well-known fact that the propositional calculi of classical mechanics are Boolean algebras.” (Birkhoff and von Neumann, 1936, p.831). Birkhoff and von Neumann then show on p.831 that the distributive law breaks down in quantum mechanics and that the generalized distributive law of logic breaks down in the related field “in the quotient algebra of the field of Lebesgue measurable sets by the ideal of sets of Lebesgue measure 0, which is so fundamental in statistics and the formulation of the ergodic principle.” (ibid., p.831). However, it must be noted that Birkhoff and von Neumann are talking about the Jevons-Pierce-Schroder interpretation (two -valued) of Boole’s original approach (four -valued), which Boole completely rejected. (See Hailperin, 1986, 1996), The reason for this rejection is that the Jevons-Peircean approach required strict complementation, which translated into additivity and linearity in probability assessments, as opposed to Boole’s realization that real world decision making required sub additivity and non-linearity, Thereafter, we will refer to the Jevons-Pierce-Schroder approach as Jevons’s approach to the interpretation of Boolean logic, which uses standard classical logic to underpin discussions of standard probability logic. Jevons’s approach removed the basic algebra which Boole combined with his new relational, propositional logic, so as to deal with indeterminate, imprecise probabilities, which are nonstandard. Jevons’s approach can’t deal with the non-standard probability logics used by Boole in chapters XVIII-XX of The Laws of Thought (1854) and by Keynes in chapters XII, XV-XVII of the A Treatise on Probability (1921) in order to deal with indeterminate, interval valued probabilities.

•Jun 7, 2026•0 citations
A methodological discussion is proposed, aiming at showing that game theory in particular (and mathematical economics in general) and quantum mechanics are isomorphic. This result relies on the equivalence of the two fundamental operators employed in the two fields, namely, the expected value in economics and the density matrix in quantum physics. This coincidence can be traced back to the contributions of von Neumann in bot disciplines.
Homologies between decision sciences, economics, and physics have been observed and applied for quite some time. Even von Neumann, who established the foundations of mathematics for quantum mechanics and game theory, noted what he considered obvious relationships between these fields of study. However, it is the physical world that is often used as a source of models for application in behavioral, micro, and macroeconomics rather than the other way around. This research seeks to advance prior work that identified an analogy between the Entropy Decision Risk Model's (EDRM) definition of proximity, which relates objective and subjective probability to explain how subjects perceive uncertainty, and the Born Rule of Quantum Mechanics. So far, there has been no derivation for the Born Rule, as it is based only upon an editor's remark in a footnote of Born's foundational 1926 paper, leaving an unanswered question. The goal of this research is to understand homologies and isomorphologies between quantum mechanics and decision engineering that will benefit both disciplines.
The relationships between game theory and quantum mechanics let us propose certain quantization relationships through which we could describe and understand not only quantum but also classical, evolutionary and the biological systems that were described before through the replicator dynamics. Quantum mechanics could be used to explain more correctly biological and economical processes and even it could encloses theories like games and evolutionary dynamics. This could make quantum mechanics a more general theory that we had thought. Although both systems analyzed are described through two apparently different theories (quantum mechanics and game theory) it is shown that both systems are analogous and thus exactly equivalents. So, we can take some concepts and definitions from quantum mechanics and physics for the best understanding of the behavior of economics and biology. Also, we could maybe understand nature like a game in where its players compete for a common welfare and the equilibrium of the system that they are members.
The relationship between expectation and price is commonly established with two principles: no-arbitrage, which asserts that both maps are positive; and equivalence, which asserts that the maps share the same null events. Constructed from the Arrow-Debreu securities, classical and quantum models of economics are then distinguished by their respective use of classical and quantum logic, following the program of von Neumann. In this essay, the operations and axioms of quantum groups are discovered in the minimal preconditions of stochastic and functional calculus, making this the natural domain for the axiomatic development of mathematical finance. Quantum economics emerges from the twin pillars of the Gelfand-Naimark-Segal construction, implementing the principle of no-arbitrage, and the Radon-Nikodym theorem, implementing the principle of equivalence. Exploiting quantum group duality, a holographic principle that exchanges the roles of state and observable creates two distinct economic models from the same set of elementary valuations. Advocating on the grounds that this contains and extends classical economics, noncommutativity is presented as a modelling resource, with novel applications in the pricing of options and other derivative securities.
Abstract Birkhoff and von Neumann make it clear what the goal of their October, 1936 paper, “The logic of quantum mechanics”, is: “The object of the present paper is to discover what logical structure one may hope to find in physical theories which, like quantum mechanics, do not conform to classical logic. Our main conclusion, based on admittedly heuristic arguments, is that one can reasonably expect to find a calculus of propositions which is formally indistinguishable from the calculus of linear subspaces with respect to set products, linear sums, and orthogonal complements-and resembles the usual calculus of propositions with respect to and, or, and not.” (Birkhoff and von Neumann, 1936, p.823; underline added). Specifically, “Up to now, we have only discussed formal features of logical structure which seem to be common to classical dynamics and the quantum theory. We now turn to the central difference between them-the distributive identity of the propositional calculus: L6: a U (b ꓵ c) = (a U b) ꓵ (a U c) and a ꓵ (b U c) = (a ꓵ b) U (a ꓵ c) which is a law in classical, but not in quantum mechanics.” (Birkhoff and von Neumann, 1936, p.830; underline added) Continuing, Birkhoff and von Neumann comment: “From a deeper mathematical viewpoint, L6 is the characteristic property of set-combination. More precisely, every "field" of sets is isomorphic with a Boolean algebra, and conversely.21 This throws new light on the well-known fact that the propositional calculi of classical mechanics are Boolean algebras.” (Birkhoff and von Neumann, 1936, p.831). Birkhoff and von Neumann then show on p.831 that the distributive law breaks down in quantum mechanics and that the generalized distributive law of logic breaks down in the related field “in the quotient algebra of the field of Lebesgue measurable sets by the ideal of sets of Lebesgue measure 0, which is so fundamental in statistics and the formulation of the ergodic principle.” (ibid., p.831). However, it must be noted that Birkhoff and von Neumann are talking about the Jevons-Pierce-Schroder interpretation (two -valued) of Boole’s original approach (four -valued), which Boole completely rejected. (See Hailperin, 1986, 1996), The reason for this rejection is that the Jevons-Peircean approach required strict complementation, which translated into additivity and linearity in probability assessments, as opposed to Boole’s realization that real world decision making required sub additivity and non-linearity, Thereafter, we will refer to the Jevons-Pierce-Schroder approach as Jevons’s approach to the interpretation of Boolean logic, which uses standard classical logic to underpin discussions of standard probability logic. Jevons’s approach removed the basic algebra which Boole combined with his new relational, propositional logic, so as to deal with indeterminate, imprecise probabilities, which are nonstandard. Jevons’s approach can’t deal with the non-standard probability logics used by Boole in chapters XVIII-XX of The Laws of Thought (1854) and by Keynes in chapters XII, XV-XVII of the A Treatise on Probability (1921) in order to deal with indeterminate, interval valued probabilities.