Time and certainty

["Harry Veeder" <veed0001@xxxxxxxxxxxxxxxx>]

----------
>From: Paul Davidson <pdavidson@xxxxxxx>
>To: POST-KEYNESIAN THOUGHT <pkt@xxxxxxxxxxxxxxxx>
>Subject: Re: The Taylor Rule: Response to Barkley and Henry Liu
>Date: Thu, Feb 17, 2000, 9:04 pm
>

>At 01:49 PM 2/17/2000 -0500, you wrote:
>>Henry,
>>      I don't think we have any disagreement here, really.
>>I agree that during "routine" times (to use Davidsonian
>>terminology) when things are ergodic and more or less
>>normal, B-S works just fine and lots of folks make money,
>>including certainly those selling the options.  I also recognize
>>that there are fancier variants that cover some of the
>>contingencies that I mentioned, but not all.
>>       The problem is not stepping outside the "paradigm."
>>It is simply that the conditions do not hold in general.  Of
>>course it is those "exceptional events" that cause it not
>>to hold, the easy measurability of risk, or the assumption of
>>a riskless interest rate.  Those "exceptional events" are
>>exactly the events that are sitting in the "skewed tails"
>>and leptokurtotic "fat tails" that we know are ubiquitous
>>in financial markets.
>
>
>Barkley:
>
>how do you know the exceptional events are not due to mutable probability
>distributions that change as the result of human behavior -- rather than
>the fat tails of  (assumed) immutable probability distribution functions --
>especially when the emprical estimate of the probability function depends
>on an ex post analysis of data observations that are merely ASSUMED to be
>drawn from the same universe.  If the universe changed over time (nonergodic)
>then it is not "kosher" to assume that all the sample observations were
>drawn from the same universe -- and your fat tails are not  the correct
>observation of data that is drawn from universes not in a "state of
>statistical control" [ See Churchman's Frankfurt Arsenal manual  or other
>people's writing on "design of experiments".]
>

Every probability distribution function is based on atoms
of certainty. However, such certainties need only exist as
certainties NOW.
(now is forever,eternal, orthogonal to time).
They do not need to exist as a stream of certainties
arriving (in time) from the FUTURE.

Harry Veeder

To see a world in a grain of sand
And a heaven in a wild flower,
Hold infinity in the palm of your hand
And eternity in an hour.

from  "AUGURIES OF INNOCENCE"
WILLIAM BLAKE (1757-1827)