Dresden 2017 – wissenschaftliches Programm

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SOE: Fachverband Physik sozio-ökonomischer Systeme

SOE 18: Economic Models II

SOE 18.4: Vortrag

Donnerstag, 23. März 2017, 15:45–16:00, GÖR 226

Non-Ergodicity and Symmetry Breaking in Time — •Mark Kirstein — TU Dresden, Germany

Complexity science harnesses tools from complexity science among others dynamical systems theory, network theory or cellular automata (CA). CA are one such tool, they are comprised of identical components, each interact following simple rules. 4 universality classes of pattern formation are identified in CA. The first three classes can all be handled by dynamical systems theory, whereas in class 4 ever evolving unpredictable patterns emerge. Questions relating to the long-term evolution of most of the interesting variables in economics are undecidable (e.g. What is the value of an asset prices in x days in the future?). Long-term prediction is out of reach for class 4. That is because class 4 entails computational irreducible evolutions. To answer such questions, time has to elapse. The history of economics and finance reveals no systematically successful prediction systems of such class 4 processes, although many economic processes fall into class 4.

I present a framework which uses a property of mathematical systems called broken ergodicity to explain broken symmetries in time. Broken time symmetry is one of the most fundamental broken symmetries that can occur. Broken symmetries in time question the nature of causality. I will elaborate how this leads to a quantum-like observer effect of economics and provide interesting relationships how this connects to black swans, the Lucas’ critique, Goodhart’s law and reflexivity.