rationality and ergodicity

classical economics postulates a human being strongly rational and developed the Expecte Utility Theory for decisions in regime of uncertainty.

I got out of my economics study last century with the rather faith conviction that the basis of rationality in economic behaviours makes imposible any cooperation

And really it was not just me, some people had to build ad hoc theories to justify cooperation in terms of social capital, while some other simply took to show how the rationality hypothesis of human behaviour is really not grounded in reality, so behavioral economics is born and “people are “dumber and nicer” and more human compared to “econs”
described in graduate economics texts”

Then lately I discover something funnily named ergodicity economics, got confused and took me a while to understand that it really describes a non-ergodic economics, models where the the ergodic hypothesis which is implicitely made in the Expected Utility Theory is abandoned.

A non-ergodic model better describes the economics and financial world and such model can retaina stronger definition of individual rational and has better chances to rebuild economics than chipping it away with the nudges criticism.

Utility Theory was built in the 18th century based on this “mistake” to think probability additive, made of independent events, while in reality, wealth accumulates over time and therefore when you consider probability of betting it becomes multiplicative, you have the St.Petersburg Paradox and maybe a cascade of consequences that brigns to my “rational man cannot cooperate” belief in university carried over to last here. Then I met the Farmers Fable and I got to love ergodicity economics (which is, a new foiundation of economics on non-ergodic pillars)

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