4 ms·

@kgwgk Ahh misread for a second there. Prospect theory is a good example. When calculated using Ole Peters method Prospect theory does not exist.

deleted 6y ago
[deleted]
kgwgk 6y ago
I don't understand what you mean. Prospect theory tries to solve the problems with EUT. His methods are within the EUT framework. Whatever the problems in EUT that are solved by prospect theory, they also need to be solved in his theory.
- ReflectedImage 6y ago
  His methods are a replacement to the EUT framework. When you attempt to do Prospect theory with Ergonomic Economics you get back the null result: "People behave as rational actors" Rather than the EUT's result of: "Faced with a risky choice leading to gains, individuals are risk-averse (concave value function). Faced with a risky choice leading to losses, individuals are risk-seeking(convex value function)." Basically ergonomics economics shows that Prospect theory is a math's error. This is one of the reasons why Ole Peters work is important.
  - kgwgk 6y ago
    > His methods are a replacement to the EUT framework. What's the solution to this problem using his methods, for example? https://en.wikipedia.org/wiki/Merton%27s_portfolio_problem https://en.wikipedia.org/wiki/Merton%27s_portfolio_problem How do his methods apply to the uncountable situations where expected utility theory is used? A random example: https://www.researchgate.net/publication/240488954_Risk_of_dam_failure_in_benefit-cost_analysis https://www.researchgate.net/publication/240488954_Risk_of_d...
    - ReflectedImage 6y ago
      I'm sure there are some great research papers that can be written by applying ergonomic economics to those problems. Is your point here that Ole Peters should convert all problems in economics to ergonomics economics all at once? Cause that's a bit of a silly point to make. There is also a fundamental problem with expected utility theory in that U can set to any formula. It's pretty close to just making stuff up on the fly.
      - kgwgk 6y ago
        What is it then? Is expected utility theory wrong and ergodicity economics is an alternative? Or is EUT too broad and ergodicity economics cannot blamed for being nothing more than a well-known way to pick a specific utility function within the EUT framework in a very constrained subset of problems? I think it's the latter. My point is that the claims of having subverted centuries of flawed economic thinking based on parallel universes are delusional. My opinion may of course improve if any of those great research papers is ever written. It would also improve if they changed their attitude and stopped saying idiotic things. I'm not sure what of those is more likely...
        ReflectedImage 6y ago
        Expected Utility Theory (EUT) is wrong and Ergodicity Economics (EE) is an alternative. EUT is claiming there are parallel universes not EE. And your right EUT is delusional to make that claim. About your opinion: "It is difficult to get a man to understand something when his salary depends upon his not understanding it." - Upton Sinclair
        kgwgk 6y ago
        > EUT is claiming there are parallel universes not EE. Can you back this up with a reference to anything not coming from Ole Peters (and known associates)? > "It is difficult to get a man to understand something when his salary depends upon his not understanding it." Helping to clear the confusion he creates in his full-time occupation is a just a hobby for me.

deleted 6y ago

[deleted]

kgwgk 6y ago

I don't understand what you mean. Prospect theory tries to solve the problems with EUT. His methods are within the EUT framework. Whatever the problems in EUT that are solved by prospect theory, they also need to be solved in his theory.

ReflectedImage 6y ago
His methods are a replacement to the EUT framework. When you attempt to do Prospect theory with Ergonomic Economics you get back the null result: "People behave as rational actors" Rather than the EUT's result of: "Faced with a risky choice leading to gains, individuals are risk-averse (concave value function). Faced with a risky choice leading to losses, individuals are risk-seeking(convex value function)." Basically ergonomics economics shows that Prospect theory is a math's error. This is one of the reasons why Ole Peters work is important.
- kgwgk 6y ago
  > His methods are a replacement to the EUT framework. What's the solution to this problem using his methods, for example? https://en.wikipedia.org/wiki/Merton%27s_portfolio_problem https://en.wikipedia.org/wiki/Merton%27s_portfolio_problem How do his methods apply to the uncountable situations where expected utility theory is used? A random example: https://www.researchgate.net/publication/240488954_Risk_of_dam_failure_in_benefit-cost_analysis https://www.researchgate.net/publication/240488954_Risk_of_d...
  - ReflectedImage 6y ago
    I'm sure there are some great research papers that can be written by applying ergonomic economics to those problems. Is your point here that Ole Peters should convert all problems in economics to ergonomics economics all at once? Cause that's a bit of a silly point to make. There is also a fundamental problem with expected utility theory in that U can set to any formula. It's pretty close to just making stuff up on the fly.
    - kgwgk 6y ago
      What is it then? Is expected utility theory wrong and ergodicity economics is an alternative? Or is EUT too broad and ergodicity economics cannot blamed for being nothing more than a well-known way to pick a specific utility function within the EUT framework in a very constrained subset of problems? I think it's the latter. My point is that the claims of having subverted centuries of flawed economic thinking based on parallel universes are delusional. My opinion may of course improve if any of those great research papers is ever written. It would also improve if they changed their attitude and stopped saying idiotic things. I'm not sure what of those is more likely...
      - ReflectedImage 6y ago
        Expected Utility Theory (EUT) is wrong and Ergodicity Economics (EE) is an alternative. EUT is claiming there are parallel universes not EE. And your right EUT is delusional to make that claim. About your opinion: "It is difficult to get a man to understand something when his salary depends upon his not understanding it." - Upton Sinclair
        kgwgk 6y ago
        > EUT is claiming there are parallel universes not EE. Can you back this up with a reference to anything not coming from Ole Peters (and known associates)? > "It is difficult to get a man to understand something when his salary depends upon his not understanding it." Helping to clear the confusion he creates in his full-time occupation is a just a hobby for me.