To understand real-world ‘non-routine’ decisions and unforeseeable changes in behaviour, ergodic probability distributions are of no avail. In a world full of genuine uncertainty — where real historical time rules the roost — the probabilities that ruled the past are not necessarily those that will rule the future. When we cannot accept that the observations, […]
economics
The Consumer Price Index is taken as a proxy for how much consumers pay for goods and services. It isn’t, for a wide variety of reasons. Here’s another: This is a component of overall CPI, but what it tracks is actually retained earnings. The justification is that if retained earnings are down, more of […]
Uber started in 2009. It incurred losses every year until 2023 except for a profit in 2019 which was due to selling subsidiaries in various countries. Numbers before the IPO are difficult to obtain, but it lost 31.5 billion from 2016 to 2022. Let’s assume a loss of equal to funding during the pre-IPO period, […]
Precis som i övriga världen handlar dagens svenska inflation delvis om att en del företag och kapitalägare vill passa på och öka sina vinstmarginaler utan att det i någon egentlig mening föreligger reala kostnadsökningar som ‘berättigar’ detta. Den typen av i ‘smyg’ höjda priser blir allt lättare att genomföra i takt med att inflationsförväntningar stiger. […]
Yesterday we talked about AI: how business has been adopting it wholesale even though so far most of the evidence is that it performs worse than humans on almost all tasks. They do this because bosses don’t want to deal with employees: they want drones that just do what they’re told, and hope that AI […]
Most people have a very personal view of the nature of debt. We know that high levels of debt and deficit spending at the household level are not sustainable. At some point, household debt has to be paid back. If a household is unable to do so, its debt will have to be renegotiated. It […]
Economic models are not expected to be even approximately true, and Hausman’s idea that even the ceteris paribus laws in economics are vague as to what exactly has to be equal makes it clear that economic laws must be abstract rather than idealized. This leads us to the question: What are the criteria of, if […]
The object of our analysis is, not to provide a machine, or method of blind manipulation, which will furnish an infallible answer, but to provide ourselves with an organized and orderly method of thinking out particular problems; and, after we have reached a provisional conclusion by isolating the complicating factors one by one, we then […]
The rational expectations hypothesis assumes—primarily for reasons of internal consistency—that agents possess complete knowledge of all relevant probability distribution functions. When attempts are made to incorporate learning into these models, often in response to longstanding criticism, it is invariably a highly constrained form of learning. This type of learning excludes the truly unexpected or surprising. […]