In Science, Entropy is generally considered to be the irreversibility of stuff.
Google defines entropy as:
lack of order or predictability; gradual decline into disorder
The 'gradual decline in to disorder', although pessimistic in its approach, fits with my idea of entropy.
In finance, the idea of entropy is present in the idea of spending money - this is an energy exchange, and (in principle at least) once the transaction is completed, it cannot be reversed.
This example is obviously at the micro-economic level. I am aiming to write a paper on the idea of Financial Entropy, and I am looking for macro-economic examples (financial relations where entropic properties are present between large corporations, e.g. Microsoft/Oracle, and/or governments.
I am thinking all we really need to do is take existing definitions of entropy and thermodynamics for physics and maths, for example:
and simply change the words 'heat' and 'information' to 'money'. My idea is that the equations should be equally applicable! The concept of this is similar to the translation of quantum mechanics into Quantum Economics.
Any links to stories, experiences, papers, theories, etc.. are appreciated.
Appendum : There is a motive to this question - the main change to financial entropy occurs when a purchase is made, and I am wondering if the entropy of a financial system is:
- continuous before and after a trigger event (a spend event)
- independent of external forces