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The Peters’ Paradox

rebuildingmacroeconomics.ac.uk · 1,705 words · saved by 1 readers

Roger Farmer - Exploiting the properties of non-ergodic random variables to understand how people behave when the future cannot be predicted

by Roger E. A. Farmer Since I’m working on non-ergodic behaviour in economic models, I was intrigued by recent claims from Ole Peters. In a series of articles, blogs and notably in a TED talk ( here ), Ole has made some rather strong assertions about the way economists model choice under uncertainty. According to Peters, economists do not understand the concept of ergodicity. As a consequence, we have apparently made some rather bad blunders. What, you may ask, is ergodicity and why does it matter? Imagine you are repeatedly confronted with an uncertain world. A good example is the one that Ol

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