John von Neumann's take on #ergodicity economics
In this thread I interpret JvN's prescient analysis on the development of mathematical economics (esp. decision theory) after his death
Source: "The Mathematician" 1947
(see here mathshistory.st-andrews.ac.uk/Extras/Von_Neu…)
#EconTwitter #Mathematics
In this thread I interpret JvN's prescient analysis on the development of mathematical economics (esp. decision theory) after his death
Source: "The Mathematician" 1947
(see here mathshistory.st-andrews.ac.uk/Extras/Von_Neu…)
#EconTwitter #Mathematics
JvN directs the readers' attention to the danger if a mathematical discipline moves farther and farther away from its empirical source or any empirical content at all.
He qualifies this if that researchers with an "exceptionally well-developed taste" could make this a success.
He qualifies this if that researchers with an "exceptionally well-developed taste" could make this a success.
If the distancing from empirics happens, he predicts a fraying of the discipline "into a multitude of insignificant branches" and it "becomes a disorganized mass of details and complexities." Ultimately the discipline faces danger of degeneration due to "abstract inbreeding".
Now compare this with the development of decision theory since the invention of Expected Utility Theory from Bernoulli 1738 to Behavioural Utility Theory incorporating nice placeholders for fairness, reciprocity, etc. into the utility function and irrational distortions of every
possible component in the optimand/decision criteria, ie probabilities and utilities in Prospect Theory, and modern varieties including more unobservables like salience and regret. Don't get me wrong, this is likely to be considered by the in-group as mathematically demanding
heck of a decision theory. To me however, this shows clear signs of "very high baroqueness" and "the danger signal is up". Is it far-fetched to state that the current degenerated creature of a decision theory originated from abstract inbreeding of ideas "into a disorganized mass
of details and complexities"? I don't think so. Here is where Johnny throws the rescue rope. What is rejuvenating? A return to the source, in case of decision theory this means Bernoulli 1738, see here researchers.one/article/2019-0…
where @ole_b_peters took the ergodicity question to DT
where @ole_b_peters took the ergodicity question to DT
and thereby "[re-injected] a more or less empirical idea", in this case of the reality of time. This opened a whole new level of "freshness and vitality" to the subject.
Thus, I summarise: Yes Johnny, your analysis "remain[s] equally true in the future"
Thus, I summarise: Yes Johnny, your analysis "remain[s] equally true in the future"
