Yingrui Yang, Associate Professor, Cognitive Science, RPI

Yingrui Yang, Associate Professor, Cognitive Science, RPI

In economics, the rational man (singular) is a central concept, which implies a global symmetry of market participants. In behavioral economics, the concept of businessmen (plural) is studied under the map of bounded rationality (Kahneman, 2002), which should be supported by some local symmetry across different individual market participants. The difficulty for a unified account of the two approaches is recognized as not only conceptual but also technical (Barberis, 2013). This difficulty can be called the “man vs. men” dilemma.

The present talk aims to provide an integrated account of both the man-approach and the men-approach. To serve this purpose, we acquire theories and modeling tools from three other disciplines. First, market analysis is integrated with human cognition, namely, to take into account mental energy and cognitive effort on the market dynamics. Second, theoretical physics, particularly electrodynamics, is used as a logical frame to lead inferences in the model development. Third, the gauge field theory is applied as a modeling method.

Gauge theory used in the standard model is the main framework in modern particle physics. It enabled us to model the man approach by the gauge transformation of the first kind, and to model the men-approach by the gauge transformation of the second kind. And this naturally leads us to achieve the invariance (in terms of Schrodinger equations and the form of Lagrangian density function) shared by the two approaches. Within the gauge theoretic framework, we made distinction of gauge potentials and field of strength at the men-level as well as at the man-level. The gauge theory enabled this work to couple the market field with cognitive filed. The resulting market-cognition field is based on the logic of Maxwell equations and the modification of electrodynamics.