This monograph analyzes accounting using information theory developed by Claude Shannon and others. A three-way framing equivalence is derived (i) when states are observable; and (ii) when states are not observable and only a signal is observable where the signal reports the state with error. The equivalence establishes equality of accounting numbers, firm rate of return, and the amount of information available to the firm where Shannon’s entropy is the information metric. The major assumptions used in deriving the state observable equivalences are constant relative risk aversion preferences, arbitrage free prices, and geometric mean accounting valuation. State unobservability is modeled using the quantum axioms, and, hence, quantum probabilities; the state is unobservable in the same way quantum objects are unobservable. The state observable equivalence is seen to be a special case of the state unobservable equivalence. Quantum probabilities allow analyzing the effects of entanglement, a phenomenon not occurring when classical probabilities are used. Entanglement is seen to be a powerful economic force, and caused by instantaneous communication of information. We speculate double entry accounting can be a mechanism for creating entanglement effects as (i) double entry accounting conveys information relevant to the expected return maximization and entropy reduction; and (ii) it does so instantaneously as the same number is simultaneously available in two places (due to double entry)..
This monograph analyzes accounting using information theory developed by Claude Shannon and others. A three-way framing equivalence is derived (i) when states are observable; and (ii) when states are not observable and only a signal is observable where the signal reports the state with error. The equivalence establishes equality of accounting numbers, firm rate of return, and the amount of information available to the firm where Shannon’s entropy is the information metric. The major assumptions used in deriving the state observable equivalences are constant relative risk aversion preferences, arbitrage free prices, and geometric mean accounting valuation. State unobservability is modeled using the quantum axioms, and, hence, quantum probabilities; the state is unobservable in the same way quantum objects are unobservable. The state observable equivalence is seen to be a special case of the state unobservable equivalence. Quantum probabilities allow analyzing the effects of entanglement, a phenomenon not occurring when classical probabilities are used. Entanglement is seen to be a powerful economic force, and caused by instantaneous communication of information. We speculate double entry accounting can be a mechanism for creating entanglement effects as (i) double entry accounting conveys information relevant to the expected return maximization and entropy reduction; and (ii) it does so instantaneously as the same number is simultaneously available in two places (due to double entry)..
In this chapter, we discuss several information measures that are important for quantifying the amount of information and correlations that are present in quantum systems. The first fundamental measure that we introduce is the von Neumann entropy (or simply quantum entropy ). It is the quantum generalization of the Shannon entropy, but it captures both classical and quantum uncertainty in a quantum state.1 The quantum entropy gives meaning to the notion of an information qubit . This notion is different from that of the physical qubit, which is the description of a quantum state of an electron or a photon. The information qubit is the fundamental quantum informational unit of measure, determining how much quantum information is present in a quantum system. The initial definitions here are analogous to the classical definitions of entropy, but we soon discover a radical departure from the intuitive classical notions from the previous chapter: the conditional quantum entropy can be negative for certain quantum states. In the classical world, this negativity simply does not occur, but it takes on a special meaning in quantum information theory. Pure quantum states that are entangled have stronger-than-classical correlations and are examples of states that have negative conditional entropy. The negative of the conditional quantum entropy is so important in quantum information theory that we even have a special name for it: the coherent information. We discover that the coherent information obeys a quantum data-processing inequality, placing it on a firm footing as a particular informational measure of quantum correlations. We then define several other quantum information measures, such as quantum mutual information, that bear similar definitions as in the classical world, but with Shannon entropies replaced with quantum entropies. This replacement may seem to make quantum entropy somewhat trivial on the surface, but a simple calculation reveals that a maximally entangled state on two qubits registers two bits of quantum mutual information (recall that the largest the mutual information can be in the classical world is one bit for the case of two maximally correlated bits). We then discuss several entropy inequalities that play an important role in quantum information processing: the monotonicity of quantum relative entropy, strong subadditivity, the quantum data-processing inequalities, and continuity of quantum entropy.
Entanglement is one of the most useful resources in quantum information processing. If a sender and receiver share noiseless entanglement in the form of maximally entangled states, then Chapter 6 showed how they can teleport quantum bits between each other with the help of classical communication, or they can double the capacity of a noiseless qubit channel for transmitting classical information. We will see further applications in Chapter 20 where they can exploit noiseless entanglement to assist in the transmission of classical or quantum data over a noisy quantum channel. Given the utility of maximal entanglement, a reasonable question is to ask what a sender and receiver can accomplish if they share pure entangled states that are not maximally entangled. In the quantum Shannon-theoretic setting, we make the further assumption that the sender and receiver can share many copies of these pure entangled states. We find out in this chapter that they can “concentrate” these non-maximally entangled states to maximally entangled ebits, and the optimal rate at which they can do so in the asymptotic limit is equal to the “entropy of entanglement” (the von Neumann entropy of half of one copy of the original state). Entanglement concentration is thus another fundamental task in noiseless quantum Shannon theory, and it gives a different operational interpretation to the von Neumann entropy. Entanglement concentration is perhaps complementary to Schumacher compression in the sense that it gives a firm quantum information-theoretic interpretation of the term “ebit” (just as Schumacher compression did for the term “qubit”), and it plays a part in demonstrating how the entropy of entanglement is the unique measure of entanglement for pure bipartite states.
In this chapter, we discuss several information measures that are important for quantifying the amount of information and correlations that are present in quantum systems. The first fundamental measure that we introduce is the von Neumman entropy. It is the quantum analog of the Shannon entropy, but it captures both classical and quantum uncertainty in a quantum state. The von Neumann entropy gives meaning to a notion of the information qubit . This notion is different from that of the physical qubit, which is the description of a quantum state in an electron or a photon. The information qubit is the fundamental quantum informational unit of measure, determining how much quantum information is in a quantum system. The beginning definitions here are analogous to the classical definitions of entropy, but we soon discover a radical departure from the intuitive classical notions from the previous chapter: the conditional quantum entropy can be negative for certain quantum states. In the classical world, this negativity simply does not occur, but it takes a special meaning in quantum information theory. Pure quantum states that are entangled have stronger-than-classical spatial correlations and are examples of states that have negative conditional entropy. The negative of the conditional quantum entropy is so important in quantum information theory that we even have a special name for it: the coherent information. We discover that the coherent information obeys a quantum data-processing inequality, placing it on a firm footing as a particular informational measure of quantum correlations.
Classical information theory, built on Shannon entropy, and quantum information theory, built on von Neumann entropy, quantify uncertainty and compression properties of probability distributions and density operators. Both are powerful, but both treat information as a property of states of individual systems or ensembles. In this manuscript we argue that entanglement—the pattern of non-classical correlations between systems—is more fundamental than either Shannon or von Neumann information. We motivate this claim with a condensate thought experiment in which many bosons occupy the same single-particle state: Shannon and von Neumann entropies assign them identical information content, yet they can be distinguished by their distinct entanglement histories with external systems. Formally, states with identical marginal density operators but different purifications represent different global information, accessible only through their entanglement structure. Entropic quantities are then seen as coarse-grained summaries of this underlying relational information. We connect this perspective to an entanglement-geometric view of physics, including Entanglement Manifold Cosmology (EMC), in which spacetime and physical “truth” emerge from the geometry of correlations. The goal is an information-theoretic narrative that is rigorous enough for physics and information theory while readable to a non-specialist who is comfortable with basic linear algebra and quantum mechanics.
Abstract This chapter discusses the principles of quantum information. The quantum mechanical equivalent of the Shannon noisy-channel communication theorem is obtained, along with some profound statements about the behavior of quantum information during generalised quantum measurements. The latter are very important in studies of quantum entanglement, but also in exploring the connections between thermodynamics, information theory, and quantum physics. This chapter also discusses equalities and inequalities related to entropy, the Holevo bound, capacity of a bosonic channel, information gained through measurements, relative entropy and thermodynamics, entropy increase due to erasure, and Landauer's erasure and data compression.
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.