Quantum Structure in Economics: The Ellsberg Paradox

The 'expected utility hypothesis' and 'Savage's Sure-Thing Principle' are violated in real life decisions, as shown by the 'Allais' and 'Ellsberg paradoxes'. The popular explanation in terms of 'ambiguity aversion' is not completely accepted. As a consequence, uncertainty is still problematical in economics. To overcome these difficulties a distinction between 'risk' and 'ambiguity' has been introduced which depends on the existence of a Kolmogorovian probabilistic structure modeling these uncertainties. On the other hand, evidence of everyday life suggests that context plays a fundamental role in human decisions under uncertainty. Moreover, it is well known from physics that any probabilistic structure modeling contextual interactions between entities structurally needs a non-Kolmogorovian framework admitting a quantum-like representation. For this reason, we have recently introduced a notion of 'contextual risk' to mathematically capture situations in which ambiguity occurs. We prove in this paper that the contextual risk approach can be applied to the Ellsberg paradox, and elaborate a sphere model within our 'hidden measurement formalism' which reveals that it is the overall conceptual landscape that is responsible of the disagreement between actual human decisions and the predictions of expected utility theory, which generates the paradox. This result points to the presence of a quantum conceptual layer' in human thought which is superposed to the usually assumed classical logical layer', and conceptually supports the thesis of several authors suggesting the presence of quantum structure in economics and decision theory.Comment: 8 pages, 1 figure. arXiv admin note: substantial text overlap with arXiv:1105.1814, arXiv:1104.1459, arXiv:1105.181

Consistent Histories and Quantum Reasoning

A system of quantum reasoning for a closed system is developed by treating non-relativistic quantum mechanics as a stochastic theory. The sample space corresponds to a decomposition, as a sum of orthogonal projectors, of the identity operator on a Hilbert space of histories. Provided a consistency condition is satisfied, the corresponding Boolean algebra of histories, called a {\it framework}, can be assigned probabilities in the usual way, and within a single framework quantum reasoning is identical to ordinary probabilistic reasoning. A refinement rule, which allows a probability distribution to be extended from one framework to a larger (refined) framework, incorporates the dynamical laws of quantum theory. Two or more frameworks which are incompatible because they possess no common refinement cannot be simultaneously employed to describe a single physical system.Comment: Latex, 31 page

Causality re-established

Causality never gained the status of a "law" or "principle" in physics. Some recent literature even popularized the false idea that causality is a notion that should be banned from theory. Such misconception relies on an alleged universality of reversibility of laws of physics, based either on determinism of classical theory, or on the multiverse interpretation of quantum theory, in both cases motivated by mere interpretational requirements for realism of the theory. Here, I will show that a properly defined unambiguous notion of causality is a theorem of quantum theory, which is also a falsifiable proposition of the theory. Such causality notion appeared in the literature within the framework of operational probabilistic theories. It is a genuinely theoretical notion, corresponding to establish a definite partial order among events, in the same way as we do by using the future causal cone on Minkowski space. The causality notion is logically completely independent of the misidentified concept of "determinism", and, being a consequence of quantum theory, is ubiquitous in physics. In addition, as classical theory can be regarded as a restriction of quantum theory, causality holds also in the classical case, although the determinism of the theory trivializes it. I then conclude arguing that causality naturally establishes an arrow of time. This implies that the scenario of the "Block Universe" and the connected "Past Hypothesis" are incompatible with causality, and thus with quantum theory: they both are doomed to remain mere interpretations and, as such, not falsifiable, similar to the hypothesis of "super-determinism". This article is part of a discussion meeting issue "Foundations of quantum mechanics and their impact on contemporary society".Comment: Presented at the Royal Society of London, on 11/12/ 2017, at the conference "Foundations of quantum mechanics and their impact on contemporary society". To appear on Philosophical Transactions of the Royal Society