Master Student @ Economic Policy on the Global Transition (EPOG+) Sorbonne University & University of Turin
34 karmaJoined Pursuing a graduate degree (e.g. Master's)


Thanks for reading and the insightful reply!

I agree with one subtle difference: the ergodicity framework allows one to decide when to apply risk neutrality and when to apply risk aversion. 

Following, Cowen and Parfit, let’s make the normative claim one wants to be risk neutral because one should not assume a diminishing value to saving lives. The EE framework allows one to divert from this view when multiplicative and repetitive dynamics are in play (i.e. wealth dynamic bets and TH St. Petersburg Paradox). Thus, not being risk-averse based on some pre-defined utility function, but because the actual long-term outcome is worse (going bankrupt and destroying the world). An actor can therefore decide to be risk neutral in scenario A (i.e. neartermist questions) and risk averse in scenario B (i.e. longtermist questions).

PS: you're completely right on the 'risk neutral agent' part my wording was ambigious.