Peters (2019) made a splash criticizing the theory of expected utility on the grounds that it implicitly assumes ergodicity where this is unwarranted. He stated this applies widely in economics, to the point of making the whole field suspect:
economics is firmly stuck in the wrong conceptual space. Because the core mistake is 350 years old, the corresponding mindset is now firmly institutionalized.
He also proposed a fix of the theory based on maximizing time-average growth rate.
Doctor et al. (2020) responded stating that Peters essentially missed the target. Economists are aware of the problem (and have been for a while) and as a rule do not apply the theory of expected utility in the naive way that Peters suggests they do (though of course there are exceptions, as everyone tends to make a mistake every now and then). Briefly, what Peters got right is not new, while what is new is not right.
So there is the original paper and the subsequent exchange with Doctor et al., and a couple of other responses. There must also have been some reactions of economists in, say, blogs and other spaces, given the publicity the original paper has received. Do we have a consensus among economists regarding the merit (relevance, validity) of Peters' critique?
This is not a question of opinion. I am trying to objectively gauge the consensus in the profession, i.e. has the matter become clear to most and has the majority opinion converged on anything concrete. References to back up an answer would be most appreciated.
The question is motivated by a discussion in the comments of "Why are utility functions typically assumed to be concave?"
- Andreozzi, L. (2021). Ergodicity in Economics: a Decision Theoretic Evaluation.
- Doctor, J. N., Wakker, P. P., & Wang, T. V. (2020). Economists’ views on the ergodicity problem. Nature Physics, 16(12), 1168-1168.
- Kim, M. (undated, a). A comment on ergodicity economics.
- Kim, M. (undated, b). A letter to economists and physicists: on ergodicity economics.
- Peters, O. (2019). The ergodicity problem in economics. Nature Physics, 15(12), 1216-1221.
- Peters, O. (2020). Reply to: Economists’ views on the ergodicity problem. Nature Physics, 16(12), 1169-1169.