Ole Peters

1/ Very curious about this, @cfcamerer.bsky.social. Long-term growth optimization, studied in ergodicity economics, provides an interesting baseline for the "cold calculation" part of loss aversion. It makes predictions that may already be testable using data you've collected.

3/ Assuming good bracketing (subjects key off in-game wealth), EE predicts that apparent loss aversion varies with wealth, which may be testable.

1/ Very curious about this, @cfcamerer.bsky.social. Long-term growth optimization, studied in ergodicity economics, provides an interesting baseline for the "cold calculation" part of loss aversion. It makes predictions that may already be testable using data you've collected.

1/6 How can I put this? "Expected-utility maximizers don't maximize utility." Why? Because utility is not usually an ergodic quantity in the mathematical models used by economists, and maximizing its expected value doesn't mean much in the real world.

5/ If you find this as interesting as I do, come along next week to listen to one of the authors, Duncan James, present the book and recent updates, in our EE seminar series: ergodicityeconomics.com/event/semina...

1/6 How can I put this? "Expected-utility maximizers don't maximize utility." Why? Because utility is not usually an ergodic quantity in the mathematical models used by economists, and maximizing its expected value doesn't mean much in the real world.

3/ What does that mean? I would say it means that this core concept of orthodox economics -- utility -- is meaningless and misleading. But don't take my word for it - this is known: empirically, expected-utility theory and its descendants, like prospect theory etc., don't work.

1/6 How can I put this? "Expected-utility maximizers don't maximize utility." Why? Because utility is not usually an ergodic quantity in the mathematical models used by economists, and maximizing its expected value doesn't mean much in the real world.

1/thread🧵 Almost 20 years ago, I started thinking about the ergodicity problem in the context of economics. That turned out to be surprisingly fruitful, and now there's a book about it. ergodicityeconomics.com/publications/

The result is a book that will enable its readers to go far beyond it. It's not a collection of papers, nor a comprehensive survey. It's a launch pad. Absorb what's in this book and take it in entirely new directions.

1/thread🧵 Almost 20 years ago, I started thinking about the ergodicity problem in the context of economics. That turned out to be surprisingly fruitful, and now there's a book about it. ergodicityeconomics.com/publications/

We start by introducing tools we found to be useful over the years, wherever they came from. Next we think about a single person making trivial decisions, then increase the complexity of the decisions one step at a time. We create a temporal context, and add ignorance.

1/thread🧵 Almost 20 years ago, I started thinking about the ergodicity problem in the context of economics. That turned out to be surprisingly fruitful, and now there's a book about it. ergodicityeconomics.com/publications/

We unified, simplified, and systematized.

1/thread🧵 Almost 20 years ago, I started thinking about the ergodicity problem in the context of economics. That turned out to be surprisingly fruitful, and now there's a book about it. ergodicityeconomics.com/publications/

The ergodicity question remained the key to it all: do we think of randomness as variation across time or as variation across multiple systems, real or imagined? So we called what we were doing "Ergodicity economics." www.nature.com/articles/s41...

1/thread🧵 Almost 20 years ago, I started thinking about the ergodicity problem in the context of economics. That turned out to be surprisingly fruitful, and now there's a book about it. ergodicityeconomics.com/publications/

Something genuinely new was emerging. While there are several excellent critiques of economic theory, including by some of its key architects, what we were developing was a constructive alternative.

1/thread🧵 Almost 20 years ago, I started thinking about the ergodicity problem in the context of economics. That turned out to be surprisingly fruitful, and now there's a book about it. ergodicityeconomics.com/publications/

In 2012 I set up @london-math-lab.bsky.social to host a research group dedicated to the project, with young and curious minds rotating in and out over the years. It would take too long to list them all, but my co-author Alex Adamou stayed for 10 years.

1/thread🧵 Almost 20 years ago, I started thinking about the ergodicity problem in the context of economics. That turned out to be surprisingly fruitful, and now there's a book about it. ergodicityeconomics.com/publications/

I benefited immensely from their encouragement and their generosity with their time.

1/thread🧵 Almost 20 years ago, I started thinking about the ergodicity problem in the context of economics. That turned out to be surprisingly fruitful, and now there's a book about it. ergodicityeconomics.com/publications/