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Ole Peters has addressed this. He had a study of real people done, which shows that real people make decisions using the time domain. The behaviour of real peo
by ReflectedImage 6y ago
Ole Peters has addressed this. He had a study of real people done, which shows that real people make decisions using the time domain.
The behaviour of real people matches Ole Peters maths but not EUT. This means that EUT does not apply to the real world, which makes EUT a pointless theory.
- QuesnayJr 6y agoEven that isn't new. There are hundreds of experiments that point out the limitations of EU. If you're looking for a reason to reject EU, you didn't need to wait until now. Allais published his paradox in 1953. If Peters wants to propose an alternate theory, he needs to explain all of this existing evidence. For example, he needs to explain why historically the return on stocks is so high. If people only cared about the logarithm of wealth, they would hold almost entirely stocks and very little bonds. They would take their weekly paycheck and deposit it directly into their Robinhood account. (And everyone would have a brokerage account.)
- ReflectedImage 6y agoOle Peters doesn't have to show things, he isn't claiming. "people only cared about the logarithm of wealth" But that isn't what Ole Peters is claiming.
- kgwgk 6y agoThat's not correct. "Multi-period Expected Utility Theory Predicts Zero Risk Aversion in Copenhagen Experiment, Same as Ergodicity Economics." https://medium.com/@aa_goldstein/multi-period-expected-utility-theory-predicts-zero-risk-aversion-in-copenhagen-experiment-same-as-60637aa28761 https://medium.com/@aa_goldstein/multi-period-expected-utili...