Exiting ergodicity

Abigail Devereaux

Chapter 6 in Handbook on Institutions and Complexity, 2025, pp 105-125 from Edward Elgar Publishing

Abstract: The bulk of dynamical models in economic theory are ergodic. Behavioral models constructed using expected utility theory, including all standard macroeconomic models, are ergodic. However, the bulk of socio-economic phenomena, including institutions, are creative, emergent, self-organized, and innovative. To explain these phenomena, models must exit ergodicity. Achieving theoretical escape velocity from ergodicity is no easy matter, but promises a rich new frontier to explore the formation, sustenance, and breakdown of economic institutions. Institutions may be explained in part by the incentive to create islands of agreement in a nonergodic sea of continually fracturing perspectives. This article is organized as an exposition for researchers new to ergodic theory and issues surrounding ergodicity and institutional economics.

Keywords: Ergodicity; Institutions; Complexity; Open-ended systems; Uncertainty; Knowledge (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035309719
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