Ergodid Economics


Was building the missing vacation cottage on the Rodanthe beachfront an example of ergodidiocy or not? Depends on the satisfaction of utility to the homeowner before the loss and after the claim was finally settled; and of the effects on the premium base to policy holders and insurers. In any event, Mother Nature remains pretty smart.

The terms ‘Ergodid’ and ‘Ergodidiocy’ have been used in this modeling in lieu of ‘Ergodic’ and ‘Ergodicity’ to indicate any system under analysis and otherwise adhering to a strictly inertial deterministic probability, for which an element of sentient choice is involved in the interactive branching of microstate values, where the weighting of such branching is a function of ‘focused rationality’, elsewhere referred to as ‘bounded rationality’, in which the purpose and effectiveness of that focus can be empirically observed to result in a range of skill level from that of novice to expert. Strictly speaking in this modeling, ergodidiocy indicates a departure from strict or weighted ergodicity which is evidenced by an element of either benign ‘unfocused rationality’ or (from an ethical, social contract perspective) malignant ‘focused irrationality’ in the interaction of microstates. This variable necessarily injects a secondary range of uncertainty concerning an understanding on the part of each party to the interaction, of the focus and skill level of the other party. This has the potential to result in a moderation of expertise in the interaction which can be seen and voiced as ‘idiocy’ by one party or the other, and quite often both. While this may at first seem humorous, and perhaps ever remain so, lack of understanding of this dynamic can have profound consequences for the implementation of any private investment or public policy based on the modeling of human interaction, and so I thought it worth mentioning and making this minor change.

The following carousel shows graphs of various weighted ergodic binary distributions after 5 iterations of binary branching, i.e. all inclusive possibility or potential of flips of a coin, and not of one instance or series of Monte Carlo distributions.

The following pop-downs access the stated files.

Ergodidiocy and the Nature of Modeling Human Experience
a brief (or not so brief) video on Economics and Ergodicity
Presentation Title pdf and embedded YouTube link
Ergodid distribution as a binary probability density, unweighted and weighted
Workbook Summary from beginning of presentation EE Sheet 1 pdf
Ergodid distribution as a series of weighted binary density with growth values conserved, tabulated by tier per microstate value, summed value, and as a tier sum percentage of the total
Workbook Summary from beginning of presentation, EE Sheet 2 pdf
Comparison of Federal Reserve adjusted tier values of 4Q 1989 and 4Q 2019 US Household Income and Net Worth against weighted ergodid percentages
Workbook Summary from beginning of presentation, EE Sheet 3 pdf
Download EE Workbook Template – Excel
Workbook Structure protected, Data entry allowed, Contact me to discuss unlocking