AUTHOR=Orrell David , Houshmand Monireh TITLE=Quantum Propensity in Economics JOURNAL=Frontiers in Artificial Intelligence VOLUME=4 YEAR=2022 URL=https://www.frontiersin.org/journals/artificial-intelligence/articles/10.3389/frai.2021.772294 DOI=10.3389/frai.2021.772294 ISSN=2624-8212 ABSTRACT=

This paper describes an approach to economics that is inspired by quantum computing, and is motivated by the need to develop a consistent quantum mathematical framework for economics. The traditional neoclassical approach assumes that rational utility-optimisers drive market prices to a stable equilibrium, subject to external perturbations or market failures. While this approach has been highly influential, it has come under increasing criticism following the financial crisis of 2007/8. The quantum approach, in contrast, is inherently probabilistic and dynamic. Decision-makers are described, not by a utility function, but by a propensity function which specifies the probability of transacting. We show how a number of cognitive phenomena such as preference reversal and the disjunction effect can be modelled by using a simple quantum circuit to generate an appropriate propensity function. Conversely, a general propensity function can be quantized, via an entropic force, to incorporate effects such as interference and entanglement that characterise human decision-making. Applications to some common problems and topics in economics and finance, including the use of quantum artificial intelligence, are discussed.