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Power, Control, and Empire

Basic Human NeedsWe are social creatures in need of love community and family.  But the other two basic needs for achievement and power, define the essence of the manufacturing and military contradiction.  Achievements lead to economic growth mainly through new manufacturing, while Power is the essence of the international political

Robots Are Hot Right Now

Taking Robots And AI SeriouslyLast month, I sent out a press release on a very important new book by Jo Ann Oravec, Good Robot, Bad Robot: Dark and Creepy Sides of Robots, Autonomous Vehicles, and AI (Springer Nature, 2022). I did not realize then how hot a topic robots and

New: Good Robot, Bad Robot

What have I been reading lately?  There is a new book about the problematic dimensions of robots, autonomous vehicles, and artificial intelligence that will be of interest to economists and technology developers as well as consumers: Good Robot, Bad Robot: Dark and Creepy Sides of Robots, Autonomous Vehicles, and AI.

Capital budgeting and Kelly betting by David J Johnstone

Capital investments are easily interpreted as bets and vice versa. The mathematical theory of betting, often known as ‘Kelly betting’, has implications for all financial decision-making under uncertainty. There have been attempts to exploit Kelly betting methods in financial portfolio optimization, but there has been little analysis of conventional capital budgeting methods against a Kelly framework. A simple comparison between methods reveals that capital budgeting decisions made using conventional finance methods can embed the error that Kelly theorists call ‘overbetting’. The outcome of overbetting is that the firm reduces its expected compound capital growth rate while simultaneously adding to the volatility of its anticipated growth path. That unfortunate pairing is mathematically precluded under Kelly betting rules but is implicitly, albeit unknowingly, sanctioned by accepted capital budgeting practices in finance. JEL Classification: G11, G12, G31

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