Thermodynamics of weakly measured quantum systems

We consider continuously monitored quantum systems and introduce definitions of work and heat along individual quantum trajectories that are valid for coherent superpositions of energy eigenstates. We use these quantities to extend the first and second laws of stochastic thermodynamics to the quantum domain. We illustrate our results with the case of a weakly measured driven two-level system and show how to distinguish between quantum work and heat contributions. We finally employ quantum feedback control to suppress detector backaction and determine the work statistics.Comment: 6 pages, 3 figure

Ambiguity Aversion, the Equity Premium and the Welfare Costs of Business Cycles

We examine the potential importance of consumer ambiguity aversion for asset prices and how consumption ‡fluctuations influence consumer welfare. First, considering a simple Mehra-Prescott-style endowment economy with a representative agent facing consumption fluctuations calibrated to match U.S. data, we study to what extent ambiguity aversion can deliver asset prices that are consistent with data: a high return on equity and a low return on riskfree bonds. For some configurations of preference parameters— a discount factor, a degree of relative risk aversion, and a measure of ambiguity aversion— we find that it can. Then, we use these parameter configurations to investigate how much consumers would be willing to pay to reduce endowment fluctuations to zero, thus delivering a Lucas-style welfare cost of fluctuations. These costs turn out to be very large: consumers are willing to pay over 10% of consumption in permanent terms.Ambiguity aversion; asset prices; business cycle