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If the book @EconTalker is writing on decision-making and data contains any decision theories imho it must include #Ergodicity Economics. Looking forward. http://www.econtalk.org/john-kay-and-mervyn-king-on-radical-uncertainty/
This might interest @EconTalker and followers! COme and submit your piece on #EE!
https://twitter.com/rjs/status/1301976884272480257
#EconTwitter
https://twitter.com/rjs/status/1301976884272480257
#EconTwitter
Regulator performing an industry survey: "What do you see as a really big risk?"
Practicioner: "Oh, we don't worry about that, because if it was a really big risk, that will be your problem, not ours"
Fantastic!
Practicioner: "Oh, we don't worry about that, because if it was a really big risk, that will be your problem, not ours"
Fantastic!
Colleague asks a decision theorists: "Which of your models are you going to use for this decision?'
Decision theorist replies: 'Come on! This is serious! I'm not going to use those models! That's for publication.'"
Decision theorist replies: 'Come on! This is serious! I'm not going to use those models! That's for publication.'"
I experienced similar wording. When I asked a PostDoc at a Finance Theory Chair at an Econ Department why he teaches only the Efficient Market Hypothesis and no other theories. His reply: "Oh this is only for teaching, in research we don't use it, of course." I never got over it
I fully agree with @ProfJohnKay here: "it's interesting that Behavioral Econ began in the 1950s and 1960s with Maurice Allais and Daniel Ellsberg, and it began as a critique of the economist's concept of rationality. In the 1970s, with Kahneman, Tversky, and
the Behavioral Economists that followed them, it got turned into a critique not of the model, but of the people for not conforming to the model. True of quite a lot of economics: that, if the world isn't like the model, it's the world's fault and not the model's."
We might make a similar summary of this development in our soon-to-be-out revision of http://bit.ly/lml-pw-r1 in the related literature section.
John Kay reminds us what to think about many questions asked in Behavioural Econ which are created to reveal a cognitive bias:
"Why on earth did you want to know the answer to this question in the first place?"
"Why on earth did you want to know the answer to this question in the first place?"
@EconTalker, you are giving almost exactly an EE answer to the ergodicity question: "the idea that people would maximize expected [something] is such a strange concept, as if I'd be indifferent to variance, I'd be indifferent to the implications of ruin that Taleb and others...
... have pointed out. I mean, it's such a bizzaro narrow view of thinking about how to narrow uncertainty down to one factor."
Exactly, why on earth should an individual making decisions over and over again be interested in the expected value.
Exactly, why on earth should an individual making decisions over and over again be interested in the expected value.
The time-average growth rate takes variance into account, and is therefore at most as great as the expected value -- in case there is no variance at all. Mark Spitznagel from Universa Investment call this the volatility tax,which is a good name & way to remember & think about it.
In the end, RR throws in a dismal statement about a dismal science by @RSkidelsky : "Economics is not a progressive science". Probably only a historian (of science) will dare to draw such a conclusion. I guess if you ask any practicioning decision theorist she would disagree.
MK: "the book [...] is not an attack on the mathematics used in economics. Some of the most useful models in terms of giving insights are some of the most difficult mathematically."
I have to disagree stronly on this point. Using expectation values is THE SINGLE MOST MISTAKE of
I have to disagree stronly on this point. Using expectation values is THE SINGLE MOST MISTAKE of
the use of math in econ. Because as #EE makes understandable, expectations values belong to the ensemble and time averages to the individual. Only in the very very special case of ergodicity, both coincide.
#EconTwitter
#EconTwitter
Although I attended a book tour event with JK in March @
https://twitter.com/nonergodicMark/status/1240638375343906816
which didn't impress me too much, I enjoyed this episode of EconTalk very much. It is a great way to start diving into the topic. Thx to @EconTalker @ProfJohnKay & Mervyn King
https://twitter.com/nonergodicMark/status/1240638375343906816
which didn't impress me too much, I enjoyed this episode of EconTalk very much. It is a great way to start diving into the topic. Thx to @EconTalker @ProfJohnKay & Mervyn King
Let me end this thread with a nice quote by @EconTalker:
"Life is a mystery and not a [mathematical] puzzle"
"Life is a mystery and not a [mathematical] puzzle"
