Interesting assertion

A large strand of modern economics is built on a mathematical fallacy that appeared in a 1738 paper by Daniel Bernoulli and was not identified until 2016 by the scholar Ole Peters.

Which strand and what mistake?

This one?

7 thoughts on “Interesting assertion”

  1. well spotted. Embarassing for Matthew but what does make me wonder what on earth Ole wrote to make him think this was Ole’s re-discovery? –

    reading the wiki link.i preferred the Samuelson resolution
    “Paul will never be willing to give as much as Peter will demand for such a contract; and hence the indicated activity will take place at the equilibrium level of zero intensity.”

  2. To a mathematician, the solution is trivially obvious. You do not sum to infinity but *to the end of the game* which is the last time that the casino can pay if it loses. So infinity does not appear in the formula.

  3. “Nutritional science was serially wrong”: did he mean cereally wrong?

    Akshully, I suspect that “nutritional science” is effectively non-existent, apart from identifying the need for calories, and some minerals and vitamins, and categorising food components into proteins, fats, and carbohydrates.

    Where were we? Bernoulli? When I was a lad, and fascinated by the toy roulette wheel we had got one Xmas, I asked my father why people didn’t win by repeatedly doubling up. He explained that even if you ignored the croupier’s share, nobody could double up for ever because they’d run out of money. That seems to be a complete explanation that you can apply all over the place, especially of you reinforce it with John77’s point.

    I found it useful years later when our maths class reached Perms, Coms, and Probs.

  4. I am not sure from reading the article just what is being described. How can it be a key strand of economics if everyone subsequent has ignored or misunderstood it, which is what Ole Peters appears to be saying? And if that strand of economics has been deemed valueless in real life, as he also seems to suggest? On the other hand, it seems to explore the mindset of a benefits’ claimant quite well, in that you can get hooked onto expecting ever higher payouts. But that is not an approach considered by Peters nor Bernoulli. All rather strange

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