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What is the best layman's explanation of ergodicity you have read/seen/heard?
My understanding is that saying a system is ergodic means that averaged over time, a system behaves in a predictable manner.
However, the error that modern economics makes is that it ignores that ergodic systems can hit “absorbing barriers” - where the game ends.
E.g. if you have 100 gamblers playing dice (an ensemble probability), then you can accurately predict the average outcome.
However, if you have one person playing dice every day for 100 days (an individual time probability), then that person will eventually go bust (hit an absorbing barrier).
So even though the market is a “random walk,” it only matters if you can survive without going bust (hitting an absorbing barrier).
I think non-ergodic means “absorbing barrier exists"
So if you had infinite money, markets are ergodic. But if you have limited money, they are non-ergodic.
So if you had infinite money, markets are ergodic. But if you have limited money, they are non-ergodic.
