Public, Peer-Review & Editing Process for Book Titled “Making Good Decisions”: Revised Version for Volume 1 – Part II – Section #7: The “Number Magic” of “Expected Value”
For new readers: Please read the “Pinned Post” at the top of this Substack’s Home Page, and titled Why Use Public Peer-Review to Write a Book? - “See for Yourself”.
For returning readers and subscribers: This post introduces the Revised Version for Volume 1 – Part II – Section #7: The “Number Magic” of “Expected Value”
Summary:
Section #7: The “Number Magic” of “Expected Value” - This section starts a series of posts that show the consequential importance of understanding the “Axiom, Assumptions & Hypotheses” of Mathematics in order to see the hidden “Meaning” behind what we would otherwise take for granted. This post presents the development of “Expected Wealth” (or equivalently “Expected Value”) as a decision criterion, and starts with its earliest public expression in Christiaan Huygens’s 1657 tract “Libellus de ratiociniis in ludo alea” (“The Value of all Changes in Games of Fortune”). We see what we understand. In the case of “Expected Value”, we have been blind to what benefits the individual decision-maker for a very long time. The “Number Magic” of Ergodicity Economics makes us understand something that we can finally see: The consequential importance of understanding the “Axioms, Assumptions & Hypotheses” of Mathematics, and the previously hidden difference in “Meaning” between the “Ensemble Average” and the “Time Average”. The individual “Meaning” hidden in the geometric mean makes it possible for us to see an alternative path to using “Expected Value” & “Expected Utility”: The path of “Time Average’ improves the “Accuracy” of the “Predictions” that support individual decision-making under uncertainty, and helps us make better individual, business, and investment decisions.
See the downloadable pdf below:
Developing…
”CTRI by Francois Gadenne” writes a business book in three volumes, published serially on Substack for public peer-review. The book connects the dots of life-enhancing practices for the next generation, free of controlling algorithms, based on the lifetime experience of a retirement age entrepreneur, & continuously updated with insights from reading Wealth, Health, & Statistics research papers on behalf of large companies as the co-founder of CTRI.