Concept · Investment & Valuation
Ergodicity
Origin: Ole Peters, popularized in investing
Biological Parallel
A population of gazelles can sustain 10% predation annually and remain stable across time—the ensemble average survives. But individual gazelles can't be 10% eaten repeatedly—one fatal encounter ends their timeline. This is non-ergodicity: what's sustainable for the group is catastrophic for individuals. Peters' ergodicity economics highlights this: strategies optimal for ensemble averages (portfolio across many firms) can be ruinous for individual time-path survival (one firm's sequential decisions).