Benedict de Spinoza., by way of a Emanuel Derman white paper (A Stylized History of Quantitative Finance) looks at the relationship from pleasure and pain on human emotions:
“Spinoza developed a system of explaining and defining the passions in terms of their relation to three more primitive feelings: Pain, Pleasure, and Desire. Every passion or emotion, in his view, is a derivative of these three sensations, which lie beneath every passion that Spinoza can name. Thus Hate, for example, is the Pain associated with an external object or person, while Love is Pleasure accompanied by the idea of an external cause.
Some passions have two underliers. Envy is Pain at someone else’s Pleasure, analogous to a convertible bond that depends on both equity and interest rates. Similarly, to give a more complex example, Spinoza regards Cruelty as the Desire to inflict Pain on Someone You Love, a triple derivatives analogous to a convertible bond that is additionally exposed to credit risk.
It is worth your time to read the entire paper . . .
click for ginormous graphic
Source: Emanuel Derman
Previously:
MiB: Emanuel Derman, Physicist in Finance (March 1, 2016)
There’s Enough Math in Finance Already. What’s Missing is Imagination. (October 23, 2011)
Math & Physics versus Wall Street (March 10, 2009)
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