Tuesday, December 13, 2005

Greatest Theorems

Free Market is Efficient

Arrow's Theorem / Gibbard Satterthwaite Theorem

Central Limit Theorem, also Chebyshev Inequality

Market Portfolio is optimal (CAPM)

Taylor Series Expansion can approximate an arbitrary function to arbitrary accuracy

Fourier Transform is invertible, and can be calculated rapidly

Geometric Series converges, and can be calculated in closed form

Nash Equilibrium exists

Satisfiability is NP-complete (Cook, Karp)

Turing Machine is in general undecidable (Rice's Theorem)

Godel's Incompleteness Theorem

Fundamental Theorem of Algebra (complex numbers suffice)

Fundamental Theorem of Calculus

This list is biased toward economic theorems because they probably have the greatest real-world impact.

Each theorem seems surprising, which is what makes it great.

They also seem to state a grand truth about the world.

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