The psychological and genes’ eye view of ergodicity economics

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2024-07-08 18:00:09

This post was my plan for a presentation at the Foundation of Utility and Risk Conference. I drew on my previous posts laying out the foundations of ergodicity economics and examining what ergodicity economics states about risk preferences. This varied somewhat from delivery (I’m easily waylaid and skipped a couple of sections). Given it’s to a technical audience, there are a few moments that might lose the lay reader.

This presentation started with a blog post. Around five years ago when I was ensconced in the corporate world, I wrote a couple of posts on an idea called ergodicity economics. A random physicist, Ole Peters, was riling people up on twitter about how economists were doing it wrong, how expected utility theory was fatally flawed, how you don’t need to introduce psychology to explain human decisions under risk, and how all the anomalies in behavioural economics could be reconciled with his new theory.

There were plenty of people countering the stronger statements, but I thought that by writing a post or two I could understand the idea better myself. So I ignored the hyperbole and tried to give a fair hearing to the underlying idea. Since I had some background in evolutionary biology, I also tried to view it from an evolutionary lens.

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