Edited by Alfred Anate Bodurin Mayaki, Tuesday 14 October 2025 at 16:19
So, both of my EMAs have been submitted for two very important MSc modules: B811 and B814. You may have seen me waffling about it on Blue Sky while I post about 'Ergodicity Economics' - the brainchild of physicist Ole Peters. Maybe? Hopefully, I am not speaking to myself.
Well, not too long ago, I wrote this rather long-winded spur-of-the-moment message to a senior economist at the UK's Office of Budget Responsibility (OBR), which is essentially a summary of two seminal papers by Beach (1998) and Lee et al (1999) on something that has intuitively been referred to succintly as 'Image Theory'.
'Image Theory' is a refreshing perception, making impromptu reference to Soviet montage theory. It illustrates how people order and superimpose mental decisions using abstract 'images' of where they are and where they would like to be, and opposes the economic theory of decisions made under assumptions of uncertainty towards maximal degrees of utility.
Here's the contents of my e-mail message to the OBR senior economist, James Watson:
"I came across some intuition that might be useful to explore in the OBR’s new framework. The concept is referred to as ‘Image Theory’ and at its core it represents a form of expected discounted utility that rejects the standard economic theory proposed by many decision models.
The most intriguing factor within the theory of Image Theory is the Values paradigm, which holds that the associated PAE grid/matrix includes a number of factors that contradict the normal distribution of variables and datapoints. For instance, beliefs are a central facet of the values paradigm in Image Theory.
The Strategic and Trajectory paradigms are generally based on something the economic agent may be able to internalise. I thought it would be interesting to explore because you might be able to derive a more comprehensible framework using this and a GenAI application, which iteratively updates the decision-making process of the rational agent, based on what one might call “deeply held, non-negotiable, core guiding principles”.
Is this verifiable?"
I was trying my best to signpost my way into his good books by proposing to augment the OBR's framework, which I blogged about a few months ago. Now, I haven't fully internalised the implications of Ergodic models. However, I have read a book review based on Ole Peters' 2025 paper, and I agree that its key feature —the time preference of capital growth is better to onboard than the instantaneous utility of Image Theory, but the compliments stop there.
Beach, L.R. ed. (1998). Image theory: Theoretical and empirical foundations. Routledge.
Lee, T.W., Mitchell, T.R., Holtom, B.C., McDaneil, L.S. and Hill, J.W., (1999). The unfolding model of voluntary turnover: A replication and extension. Academy of Management Journal, 42(4), pp.450-462.
Morrell, K., Loan‐Clarke, J. and Wilkinson, A., (2004). The Role of Shocks in Employee Turnover. British Journal of Management, 15(4), pp.335-349.
On Belief and the Values Paradigm - Image Theory
So, both of my EMAs have been submitted for two very important MSc modules: B811 and B814. You may have seen me waffling about it on Blue Sky while I post about 'Ergodicity Economics' - the brainchild of physicist Ole Peters. Maybe? Hopefully, I am not speaking to myself.
Well, not too long ago, I wrote this rather long-winded spur-of-the-moment message to a senior economist at the UK's Office of Budget Responsibility (OBR), which is essentially a summary of two seminal papers by Beach (1998) and Lee et al (1999) on something that has intuitively been referred to succintly as 'Image Theory'.
'Image Theory' is a refreshing perception, making impromptu reference to Soviet montage theory. It illustrates how people order and superimpose mental decisions using abstract 'images' of where they are and where they would like to be, and opposes the economic theory of decisions made under assumptions of uncertainty towards maximal degrees of utility.
Here's the contents of my e-mail message to the OBR senior economist, James Watson:
I was trying my best to signpost my way into his good books by proposing to augment the OBR's framework, which I blogged about a few months ago. Now, I haven't fully internalised the implications of Ergodic models. However, I have read a book review based on Ole Peters' 2025 paper, and I agree that its key feature —the time preference of capital growth is better to onboard than the instantaneous utility of Image Theory, but the compliments stop there.
I also managed to find it in me to share my thoughts with French economist Thomas Piketty.
References
Beach, L.R. ed. (1998). Image theory: Theoretical and empirical foundations. Routledge.
Lee, T.W., Mitchell, T.R., Holtom, B.C., McDaneil, L.S. and Hill, J.W., (1999). The unfolding model of voluntary turnover: A replication and extension. Academy of Management Journal, 42(4), pp.450-462.
Morrell, K., Loan‐Clarke, J. and Wilkinson, A., (2004). The Role of Shocks in Employee Turnover. British Journal of Management, 15(4), pp.335-349.