We Need To Talk About Ergodicity

Behavioural Investment

You have a gun which holds six bullets, but only has one in the chamber.  You use it to play a game of Russian roulette with a group of 19 other people.  Each of you takes one turn in spinning the chamber, holding the gun to your temple and pulling the trigger.  If you are successful you win £1m, if not, well, then you die. Whilst this may not be an appealing proposition, your chance of death is relatively low (17%), and potential for becoming a millionaire high (83%).  It is also far more attractive than an alternative version of the game where instead of playing with a group, you play on your own.  In this instance there are still 20 turns but each time the gun is directed at your head.  The odds on the outcome for you in this instance are not so favourable.

These contrasting approaches to…

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