Yi-Cheng ZhangIn hmolscience, Yi-Cheng Zhang (1956-) (CR:4) is Chinese-Swiss physicist noted for his 1998 founding of the EconoPhysics Forum, which has econophysics, financial physics, and sometimes human thermodynamics related topic material.

In 1998, Zhang, in his “Toward a Theory of Marginally Efficient Markets”, presented at the Econophysics meetings in Rome, argued the following:

“Empirical evidence suggests that even the most competitive markets are not strictly efficient. Price histories can be used to predict near future returns with a probability better than random chance. Many markets can be considered as favorable games, in the sense that there is a small probabilistic edge that smart speculators can exploit. We propose to identify this probability using conditional entropy concept. A perfect random walk has this entropy maximized, and departure from the maximal value represents a price history's predictability. We propose that market participants should be divided into two categories: producers and speculators. The former provides the negative entropy into the price, upon which the latter feed. We show that the residual negative entropy can never be arbitraged away: infinite arbitrage capital is needed to make the price a perfect random walk.”

This, of note, is an information entropy model, e.g. “conditional entropy”, and therefore not physics. Joseph McCauley (2002), to note, cites this amid a discussion of an attempt at a thermodynamic formulation stock buying and selling, mistakenly thinking that Zhang is referring to thermodynamics, and that “arbitrage corresponds to lower entropy, reflecting correlations in the empirical returns distribution.” [3]

Zhang’s asking of Joseph McCauley to write reviews and then articles for the Econophysics Forum, in 1999, to note was what drew him in to econophysics.

Zhang completed his PhD in something at the International School for Advanced Studies, Italy, in 1984 and since 1992 has been a physics professor at the University of Fribourg, Switzerland, and in 2016 was the chair of the physics department. [1]

Quotes | On
The following are Zhang related quotes:

“In 1995, Eugene Stanley coined the phrase ‘econophysics’ at a meeting in India. At about the same time, Yi-Cheng Zhang and his group introduced the econophysics webpage: unifr.ch/econophysics. Simon Capelin at Cambridge University Press led the charge by publishing Stanley’s and other econophysics books. His program there is still strong. Sadly, econophysics, like nonlinear dynamics, was never recognized by the APS as part of physics. American physics prefers (nonfalsifiable) string theory to falsifiable approaches to social problems. My university offers one of the only econophysics PhD programs in the world.”
Joseph McCauley (2008), “Emergence of Finance Theory and Econophysics” [16]

1. Yi-Cheng Zhang (about) – GrowthCom.eu.
2. Zhang, Yi-Cheng. (1999). “Toward a Theory of Marginally Efficient Markets” (abs), Physica A: Statistical Mechanics and Applications, 269(1):30-44; Based on presentations at the Econophysics meetings in Rome, Mar 1998, and Palermo, Sep 1998; in: Palermo Proceedings (editor: R.N. Mantegna). Publisher, 1999.
3. McCauley, Joseph. (2002). “Self-Financing, Replicating Hedging Strategies, an Incomplete Thermodynamic Analogy” (abs) (pdf)”, ArXiv Condensed Matter Physics, Preprint # cond-mat/0203304.
4. McCauley, Joseph L. (2008). “Evolution of FX Markets via Globalization of Capital”, in: Evolution from Cellular to Social Scales (editors: Arne Skjeltorp and Alexander Belushkin) (§3.3: “Emergence of Finance Theory and Econophysics”, pgs. 122-25; quote, pg. 125). Springer Science & Business Media.

External links
Yi-Cheng Zhang – Academia.edu.
Yi-Cheng Zhang – Google Scholar.

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