ssrn-id1653911

ssrn-id1653911 - Quantum Mechanics and Human Decision...

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Electronic copy available at: http://ssrn.com/abstract=1653911 1 Quantum Mechanics and Human Decision Making Paras M. Agrawal* and Ramesh Sharda** William S. Spears School of Business, Oklahoma State University, Institute for Research in Information Systems, Stillwater, Oklahoma 74078, USA (*pm.agrawal@okstate.edu ; ** ramesh.sharda@okstate.edu ) Abstract In physics, at the beginning of the twentieth century it was recognized that some experiments could not be explained by the conventional classical mechanics but the same could be explained by the newly discovered quantum theory. It resulted into a new mechanics called quantum mechanics that revolutionized the scientific and technological developments. Again at the beginning of the twenty-first century, it is being recognized that some experiments related with the human decision making processes could not be explained by the conventional classical decision theory but the same could be explained by the models based on quantum mechanics. It is now recognized that we need quantum mechanics in psychology as well as in economics and finance. In this paper we attempt to advance and explain the present understanding of applicability of quantum mechanics to the human decision making processes. Using the postulates analogous to the postulates of quantum mechanics, we show the derivation of the quantum interference equation to illustrate the quantum approach. The explanation of disjunction effect experiments of Tversky and Shafir(1992) has been chosen to demonstrate the necessity of a quantum model. Further to suggest the possibility of application of the quantum theory to the business related decisions, some terms such as price operator, state of mind of the acquiring firm, etc. are introduced and discussed in context of the merger/acquisition of business firms. The possibility of the development in the areas such as quantum finance, quantum management, application of quantum mechanics to the human dynamics related with health care management, etc. is also indicated. Key words: Quantum decision model, quantum interference, disjunction effect, human decision making, quantum information processing, merger/acquisition of business firms, cognitive science, two- stage gambling experiment, the sure-thing principle, Tversky-Shafir experiments.
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Electronic copy available at: http://ssrn.com/abstract=1653911 2 1. Introduction Under some conditions, light waves reaching from two sources at a point can interfere to cancel each other resulting into the darkness at that point. Such strange behavior of light waves was well known even before the discovery of quantum mechanics. The development of quantum mechanics in early 20 th century generalized such wave nature and interference phenomenon to electrons and other particles. In addition to quantum interference, quantum mechanics also yields many other peculiar results such as uncertainty principle, quantum nature of light, quantum theory of measurement, tunneling, etc. which are in contradiction with our common
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This note was uploaded on 10/24/2011 for the course SCIENCE PHY 453 taught by Professor Barnard during the Winter '11 term at BYU.

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ssrn-id1653911 - Quantum Mechanics and Human Decision...

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