Brownian Motion In the stock Market 149 gies wIth many other populations, also normally distributed, may be successfully exploited in trying to understand the new one A rationale for the use of loge P in preference to P as independent var able 1s also given by the general statistical precept that equal intervals of the argument chosen as independent varable should have equal physical or in this case psychological, signIficance, for the data to be most reveal (reference 1, p 6) This choice was confirmed by the resulting discover of the preferred stocks This equal-interval'argument imphes that the difference in subjective sensation of profit (or loss), or change in value, for example, between a $10 and an Sll price for a given stock, Is equal to 300一 2325 RATIO UNIT SCALE (LOG. P) 20304050607000150 Fug. 4 Distribution function of log, P for common stocks (NYSE, July 31, 1956) that for a change from $100 to $110 Thus our statistician 1s led to hypoth cate the Weber-Fechner law, and the dominance of a single variable in the stImulus, from the observational procedure outlined above Figure 5 gives the closing prices of common stocks on the american Stock Exchange(ASE)and Fig 6 its cumulated distribution, as a rough test of normality The introduction of the Weber-Fechner law as a working hypothesIs now leads our statistician to examine price changes that occur in indivdual stocks, since by hypothesis the absolute level of price 1s of no signIficance only changes in prices(specIfically Aloge P or the loge of price ratios)can measured by traders or investors Histograms of th hese for Interval for interve th are published n The Exchange Accumulated distrbutions of o of a month and a year are given n Figs 7 and 8 Note that