Econophysics: What can physicists contribute to economics?

Abstract. In recent years, a considerable number of physicists have started applying physics concepts and methods to understand economic phenomena. The term "Econo-physics " is sometimes used to describe this work. Economic fluctuations can have many repercussions, and understanding fluctuations is a topic that many physicists have contributed to in recent years. Further, economic systems are examples of com-plex interacting systems for which a huge amount of data exist and it is possible that the experience gained by physicists in studying fluctuations in physical systems might yield new results in economics. Much recent work in econophysics is focussed on under-standing the peculiar statistical properties of price fluctuations in financial time series. In this talk, we discuss three recent results. The first result concerns the probability distribution of stock price fluctuations. This distribution decreases with increasing fluctuations with a power-law tail well outside the Levy stable regime and describes fluctuations that differ by as much as 8 orders of magnitude. Further, this non stable distribution preserves its functional form for fluctuations on time scales that differ by 3 orders of magnitude, from 1 min up to approximately 10 days. The second resul