The AIP journal Chaos has announced that “Evaluating gambles using dynamics,” co-authored by SFI’s Murray Gell-Mann and Ole Peters, was the most-read paper of 2016.
The paper re-conceptualizes simple gambles, such as whether to make a bet or take out an insurance policy.
Decisions surrounding such gambles extend through all major branches of economic theory and have traditionally been evaluated using expectation values. The expectation-value approach imagines all parallel possibilities and averages across them in a linear, additive way.
In February 2016, Peters, an SFI external professor based at the London Mathematical Laboratory, and Gell-Mann, Life Trustee and an SFI distinguished fellow, published an alternative model for evaluating gambles, where humans act to optimize their wealth as time passes. Their dynamic approach was first articulated in an SFI working paper.
"The first perspective — considering all parallel worlds — is the one adopted by mainstream economics," Gell-Mann explained at the time of publication. "The second perspective — what happens in our world across time — is the one we explore and that hasn't been fully appreciated in economics so far."
Peters added: "What happens when we switch perspectives is astonishing. Many of the open key problems in economic theory have an elegant solution within our framework.”
Read the AIP's most-read list of Chaos papers in 2016 (February 23, 2017)
Read the news release by the London Mathematical Laboratory (February 23, 2017)
Read the paper in Chaos (February 2, 2016)