Time, Space, and Climate Damages
Does the way we look at a problem – over time or across an ensemble – change what we see? The main insight from Ergodicity Economics is that when ergodicity […]
Concepts
Expected-utility maximizers don’t maximize utility.
Ergodicity economics is an umbrella term for addressing issues in economics research by carefully considering the ergodicity problem — that’s the problem that the expected value of something may be
An ergodicity perspective on reinforcement learning
“Reinforcement learning, a powerful branch of artificial intelligence (AI), has revolutionized the way machines learn and make decisions. From training autonomous robots to mastering complex games, reinforcement learning holds the
For to withhold is to perish
A central puzzle in evolutionary biology is that of spontaneous altruism. When two creatures interact, why might one sacrifice something of value in order to help the other? Why, if
Insurance as an ergodicity problem
The business of insurance, by various measures, is the largest industry on earth. Somewhat surprisingly, mainstream economics struggles to explain its existence. This post is about how ergodicity economics approaches
The infamous coin toss
In 2011 I gave a 15-minute talk to a lay audience in London. The topic I had chosen was ergodicity breaking, and the challenge was clear: how do you get
What’s a growth rate, really?
Growth rates are at the heart of ergodicity economics, and economic news are full of them, too — “GDP grew by 3% last year,” something like that. Sometimes we also
The Copenhagen experiment
A few weeks ago I was made aware of an experiment that was recently carried out in Copenhagen, by a group of neuroscientists led by Oliver Hulme at the Danish
Economics 101: Bertrand Russell is the Pope
If we assume that a false proposition is true, we can prove anything (ex falso quodlibet). Bertrand Russell, so the story goes, once mentioned this in class. A student raised
The trouble with Bernoulli 1738
Not all academic fields have a clear starting point, a seminal paper that constitutes the foundation of the entire discipline. But economics does. The paper that defines modern formal economics
Max Planck’s scheinproblems
In June 1946 Max Planck spoke in the Göttingen physics colloquium. Planck was 88 years old, had received the highest honors of his community, including a Nobel Prize in 1918
Doing a Laplace
This is a bit of LML jargon that we felt is worth promoting, even though it’s terribly unfair to a great mathematician. So please, you admirers of Laplace, don’t take
Ink, science, story-telling
Scientific theorizing is indeed about finding something reliable in the world — if we’re lucky something reliable enough to be called a law. Why do we want something that doesn’t
Winner take all
Michael Mauboussin recently re-tweeted an article by Jason Zweig in the Wall Street Journal titled “Disturbing New Facts About American Capitalism”. The article summarizes reports of an increasing concentration of
Gas in a box or nuclear explosion?
This post is about mindset, culture, implicit assumptions. The big assumption in neoclassical economics is ergodicity, or equilibrium, or stationarity, or stability — basically the idea that nothing ever changes
Reproducibility and weak ergodicity breaking
The term “weak ergodicity breaking” helps categorize things by their ergodic properties: ergodic strongly non-ergodic weakly non-ergodic This list is chronological, in that there used to be an implicit belief