Ergodicity, a term I had never heard before, threatens to undermine the very foundations of economics and risk analysis as it exposes flaws in the fundamental assumptions of these fields.
Despite the new garnered attention, the concept of ergodicity is rather old and has been applied commonly in the fields of mathematics and physics. Unsurprising is then that this concept is brought to the limelight, not by an economist but by Ole Peters, a theoretical physicist, and Nassim Nicholas Taleb a distinguished Professor of Risk Engineering and popular author.
So how does ergodicity work, and why could it revolutionize economics?
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