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Luca Dellanna on Risk, Ruin, and Ergodicity

EconTalk

Taking Risks and Non-Irrigidicity: Learning from Baking Cakes

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When I moved to Israel for a new job, my wife and I sold our house, taking a risk and committing to success. I explain non-rigidity with the example of baking a cake. If you bake a cake once, it's likely to be bad. But if you bake it multiple times, you'll eventually get some good ones. Non-rigidity in this case is a good thing because it leads to learning and positive outcomes.

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