The mathematical concepts of randomness were first developed in economics in the 17th century, primarily in the context of problems of gambling and games of chance. These early conceptions were flawed, however, by the assumption that randomness playing out over time could always be analysed as if it were randomness playing out over an ensemble of parallel systems or “parallel universes.” In modern mathematical terms, this was equivalent to assuming that random processes under consideration were “ergodic.” This assumption is mathematically convenient, yet has led modern economics into conceptual difficulties which severely limit the usefulness of mainstream economic theory.
Recent efforts to remove this assumption from the foundations of economics, and thereby build a more coherent and useful set of theories, go under the term Ergodicity Economics. This has been a research theme at LML since 2012. In January 2021, the LML will host an online conference on Ergodicity Economics to promote applications of the ergodicity concept to research in economics and other fields, including neuroscience, psychology, marketing and medicine. Speakers will present their work in short recorded talks, to be circulated in advance and broadcast with live discussion during the conference. More than 250 parties have already signed up to participate, with affiliations including the Canadian government, the Financial Times, Caltech, Amazon, Oxford University and JP Morgan.