Tuesday, November 16, 2010

Oil not well quantized

I previously noted choppy oil using the hydraulic model.  In the quantization model, that same choppiness can be seen as a lack of quantization, we seems to have quantized at a noticeable period and price in the series.  Looking above we can see, over time, that prices seem to come in $5 increments. When we observe quantization error, we start to observe individual transactions in the flow, it no longer seems liquid.  Economists have a way of looking at a series of prices like oil and determining the amount of quantization going on, measure the total entropy  captured by quantization.  Oil flow is still not liquid, the global search to find a stable oil allocation goes on.

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