Focus on getting the input right rather than on maximizing the output.
Do not envy the survival of ventures in which you don't wich to participate, and do not envy success that don't reproduce well.
– Ergodicity: Definition, Examples, And Implications, As Simple As Possible
- non-ergodicity: it causes your lifetime outcome to be worse than the expected one.
Key Points
- Irreversibility obsorts future gains.
- We call population outcome the outcome of many people performing an action once, and lifetime outcome the outcom of one person performing an action mayn times. If they differ, the system that produces them is non-ergodic.
- You can only rely on expected outcomes if you are guaranteed a large number of repetitions. Otherwise, they are misleading. (The law of large numbers requires a large number of repetitions).
- risk aversion is rationality in the precense of non-ergodicity.
- It is not performance that is the most important factor for long-term performance but survival.
- Something can work on average and still fail with permanent consequences.
- What's best for the survival of the individual isn't necessaryily what's best for the survival of the population, and the other way around.
All trhee assetions only apply to non-ergodic contexts. Hence the importance of unserstanding ergodicity. Whether you are in an ergodic world or not determines what is rational and what isn't.