
The Ergodicity Problem in Economics - mmhsieh
https://www.nature.com/articles/s41567-019-0732-0
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photojosh
I've been following the author for a while now (no personal connection), and
I'm taken with the ideas. Mainly because it's never seemed right to me that
economics' "rational person" doesn't resemble anyone in the real world.

[0] also out today explains it starting from a concrete example:

> the coin toss game seems worth playing because equal probability of a 50%
> gain and a 40% loss are no different from a 5% gain.*

> Why people don't choose to play the game, seemingly ignoring the opportunity
> to gain a steady 5%, has been explained psychologically-- people, in the
> parlance of the field, are "risk averse". But according to Peters, these
> explanations don't really get to the root of the problem, which is that the
> classical "solution" lacks a fundamental understanding of the individual's
> unique trajectory over time.

You can also get his full lecture notes at [1].

[0] [https://www.santafe.edu/news-center/news/fix-economic-
theory...](https://www.santafe.edu/news-center/news/fix-economic-theory-
changes-everything-gambles-inequality-ponzi-schemes)

[1] [https://ergodicityeconomics.com/lecture-
notes/](https://ergodicityeconomics.com/lecture-notes/)

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bluechair
Does Nassim Nicholas Taleb have a HN account because I’d love to hear what he
has to say about this paper.

~~~
skullgrid
This is not a direct reference to the linked Nature article (which is
essentially a review article, I think), but Taleb is definitely a fan of
Peters' work [1].

[1] [https://medium.com/incerto/the-logic-of-risk-
taking-107bf410...](https://medium.com/incerto/the-logic-of-risk-
taking-107bf41029d3)

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thedudeabides5
tl dr

lots of economics uses models that don't deal well the realities of time,
because it makes the math a lot harder.

Dealing with the reality of time and path dependence makes the models a lot
more complex, but often more accurate.

~~~
Gibbon1
> because it makes the math a lot harder.

[https://en.wikipedia.org/wiki/Streetlight_effect](https://en.wikipedia.org/wiki/Streetlight_effect)

