Related papers: An Apology for Money
We provide a detailed characterization of the optimal consumption stream for the additive habit-forming utility maximization problem, in a framework of general discrete-time incomplete markets and random endowments. This characterization…
We provide simple models for the utility function (or psychology) of an actor trading a multitude of goods for money. In this framework, money has no intrinsic consumption value, but is required as a medium of exchange. A collection of such…
Many widely used models amount to an elaborate means of making up numbers--but once a number has been produced, it tends to be taken seriously and its source (the model) is rarely examined carefully. Many widely used models have little…
Standard economic theory, starting with Adam Smith's invisible hand, holds that those who trade for their own selfish motives of maximizing their private preferences may contribute more to the public wealth than those who claim altruistic…
The primary objective of this note is to revisit the two envelope problem and propose a simple resolution. It is argued that the paradox arises from the ambiguity associated with the money content $x of the chosen envelope. When X=x is…
Since cheating is obviously wrong, arguments against it (it provides an unfair advantage, it hinders learning) need only be mentioned in passing. But the argument of unfair advantage absurdly takes education to be essentially a race of all…
Time-decaying currencies have long been discussed in economic theory as a means to discourage hoarding and promote circulation. However, their modern digital implementation as a universal basic income (UBI) mechanism raises unresolved…
We introduce a simple model for addressing the controversy in the study of financial systems, sometimes taken as brownian-like processes and other as critical systems with fluctuations of arbitrary magnitude. The model considers a…
Why is the universe comprehensible? How is it that we can come to know its regularities well-enough to exploit them for our own gain? In this essay I argue that the nature of our comprehension lies in the mutually agreed upon methodology we…
The rapid dissemination of information through digital platforms has revolutionized the way we access and consume news and information, particularly in the realm of finance. However, this digital age has also given rise to an alarming…
This Article introduces the generative reasonable person, a new tool for estimating how ordinary people judge reasonableness. As claims about AI capabilities often outpace evidence, the Article proceeds empirically: adapting randomized…
The thing about inflation is that it ravages your income if you don not keep up with it and you do not know when it will stop.
We study the associations between everyday economic decision-making quality and people's emotional states. Using high-frequency, highly disaggregated consumer "scanner" data, we show that the cost of poor decision-making is substantial, on…
Motivated by cost of computation in game theory, we explore how changing the utilities of players (changing their complexity costs) affects the outcome of a game. We show that even if we improve a player's utility in every action profile,…
Four radical ideas are presented. First, that the rationale for cancellation of principal can be modified in modern banking. Second, that non-cancellation of loan principal upon payment may cure an old problem of maintenance of positive…
An age-old controversy in mathematics concerns the necessity and the possibility of constructive proofs. The controversy has been rekindled by recent advances which demonstrate the feasibility of a fully constructive mathematics. This…
This essay considers the special character of mathematical reasoning, and draws on observations from interactive theorem proving and the history of mathematics to clarify the nature of formal and informal mathematical language. It proposes…
This paper discusses serious drawbacks of existing knowledge in macroeconomics and finance in explaining and predicting economic and financial phenomena. Complexity science is proposed as an alternative approach to be used in order to…
Entropy is a very useful concept from physics that tries to explain how a system behaves from a point of view of the thermodynamics. However, there are two ways to explain entropy, and it depends on if we are studying a microsystem or a…
`All models are wrong but some are useful' (George Box 1979). But, how to find those useful ones starting from an imperfect model? How to make informed data-driven decisions equipped with an imperfect model? These fundamental questions…