Peters’ December 2019 Nature Physics paper (https://www.nature.com/articles/s41567-019-0732-0 ) provides some perspective on 0.6/1.5x coin flip example and other conclusions of the above discussion. (If Peters’ claims have changed along the way, I wouldn’t know.)
In my reading, there Peters’ basic claim is not that ergodicity economics can solve the coin flip game in a way that classical economics can not (because it can, by switching to expected log wealth utility instead of expected wealth), but the utility functions as originally presented are a clutch that misinforms us on people’s psychological motives in doing economic decisions. So, while the mathematics of many parts stays the same, the underlying phenomena can be more saliently reasoned about by looking at the individual growth rates in context of whether the associated wealth “process” is additive or multiplicative or something else. Thus there is also less need to use lingo where people may have an (innate, weirdly) “risk-averse utility function” (as compared to some other less risk-averse theoretical utility function).
Peters’ December 2019 Nature Physics paper (https://www.nature.com/articles/s41567-019-0732-0 ) provides some perspective on 0.6/1.5x coin flip example and other conclusions of the above discussion. (If Peters’ claims have changed along the way, I wouldn’t know.)
In my reading, there Peters’ basic claim is not that ergodicity economics can solve the coin flip game in a way that classical economics can not (because it can, by switching to expected log wealth utility instead of expected wealth), but the utility functions as originally presented are a clutch that misinforms us on people’s psychological motives in doing economic decisions. So, while the mathematics of many parts stays the same, the underlying phenomena can be more saliently reasoned about by looking at the individual growth rates in context of whether the associated wealth “process” is additive or multiplicative or something else. Thus there is also less need to use lingo where people may have an (innate, weirdly) “risk-averse utility function” (as compared to some other less risk-averse theoretical utility function).