I actually can’t recall seeing anyone make the mistake of treating efficient markets like high-status authorities in a social pecking order.
I’ve seen often enough, or at least I think I’ve seen often enough, people treating efficient markets or just “free, deregulated market” as some kind of benevolent godly being that is able to fix just any problem.
I admit that I came from the opposite corner and that I flinched at the first paragraphs of the explanation on efficient market, but I still feel that a lot of bright people aren’t asking the questions
“Is it more profit-efficient to fix the problem or to just cheat?”
“Can actors get more profit by causing damages worse than the benefits they provide?”
“Is the share of actors that, seeing that the cheaters niche of the market is already filled when they get there, would go on to do okayish profits by trying to genuinely fix the problem able to produce more public value than the damage cheaters produce?”
Asking an unregulated free market to fix a problem in exchange for rewards is like asking an unaligned human intelligence with thousands of brains to do it.
I have seen more blatant examples of this toward the concept of free market, but a lot of people still seem to interpret the notion of “efficient market” as “and given the wisdom of the efficient market, the economy would improve and produce more value for everyone”, and I feel the two views are related, though I might be wrong about how many people have a clear difference of the two concepts in their heads.
“If these investments really are bogus and will horribly crush the economy when they collapse, surely someone in the efficient market would have seen it coming” is the mindset I’m trying to describe, though this mindset seem to have a blurry idea of what an efficient market is about.
Yes In the same sense that’s there’s no such thing as being optimal but not optimising anything in particular, or optimising everything in general, there is no sense that a market being unspecifically efficient will solve a problem that has never been fed into it.
There is also a constant confusion between unregulated markets and free markets. Unregulated markets can be captured by monpolies, and thereby cease to be free in important senses.
What is the utility function of a market, absent regulation?
I’m not 100% sure I understood the first paragraph, could you clarify it for me if I got it wrong?
Essentially, the “efficient-markets-as-high-status-authorities” mindset I was trying to describe seems to me that work as such:
Given a problem A, let’s say providing life saving medicine to max number of people, it assumes that letting agents motivated by profit act freely, unrestricted by regulations or policies that even be aimed to try fix problem A, would provide said medicine to more people than an intentional policy of a government that’s trying to provide said medicine to max number of people.
The market doesn’t seem to have a utility function in this model, but any agent in this market (that is able to survive in it) is motivated by an utility function that just wants to maximise profit.
Part of the reason for the assumption that “free market of agents motivated by profit” should be so good at producing solution for problem A (save lives with medicine) is that the “free market” is awesomely good at pricing actions and at finding ways to get profits, because a lot of agents are trying different things at their best to get profit and everything that works get copied. (If anyone has a roughly related theory and feels I butchered or got wrong the reasoning involved, you are welcomed to express it right, I’m genuinely interested).
My main objection to this is that I fail to see how this is different by asking an unaligned AI that’s not super intelligent, but still a lot smarter than you, to get your mother out of a burning building so you’d press the reward button the AI wants you to press.
If I understood your first paragraph correctly, we are both generally skeptic that a market of agents set about to maximise profit would be, on average in many different possible cases, good at generating value that’s different than maximising profit.
Thank you for the clarification between unregulated and free.
I was aware of how one wouldn’t lead to the other, but I’m now unsure about how many of the people I talked to about this had this distinction in mind. I saw a lots of arguments for deregulation in political press that made appeals to the idea of the “free market”, so I think I usually assumed that one arguing for one of these positions would assume that a free market would be an unregulated one and not foresee this obvious problem.
I’ve seen often enough, or at least I think I’ve seen often enough, people treating efficient markets or just “free, deregulated market” as some kind of benevolent godly being that is able to fix just any problem.
I admit that I came from the opposite corner and that I flinched at the first paragraphs of the explanation on efficient market, but I still feel that a lot of bright people aren’t asking the questions
“Is it more profit-efficient to fix the problem or to just cheat?”
“Can actors get more profit by causing damages worse than the benefits they provide?”
“Is the share of actors that, seeing that the cheaters niche of the market is already filled when they get there, would go on to do okayish profits by trying to genuinely fix the problem able to produce more public value than the damage cheaters produce?”
Asking an unregulated free market to fix a problem in exchange for rewards is like asking an unaligned human intelligence with thousands of brains to do it.
I have seen more blatant examples of this toward the concept of free market, but a lot of people still seem to interpret the notion of “efficient market” as “and given the wisdom of the efficient market, the economy would improve and produce more value for everyone”, and I feel the two views are related, though I might be wrong about how many people have a clear difference of the two concepts in their heads.
“If these investments really are bogus and will horribly crush the economy when they collapse, surely someone in the efficient market would have seen it coming” is the mindset I’m trying to describe, though this mindset seem to have a blurry idea of what an efficient market is about.
Some people did see the mortgage-backed securities crash of 2008 coming and made money on it!
Indeed, including the people who willingly caused it. But profiting from a problem is not the same as fixing it.
Yes In the same sense that’s there’s no such thing as being optimal but not optimising anything in particular, or optimising everything in general, there is no sense that a market being unspecifically efficient will solve a problem that has never been fed into it.
There is also a constant confusion between unregulated markets and free markets. Unregulated markets can be captured by monpolies, and thereby cease to be free in important senses.
What is the utility function of a market, absent regulation?
I’m not 100% sure I understood the first paragraph, could you clarify it for me if I got it wrong?
Essentially, the “efficient-markets-as-high-status-authorities” mindset I was trying to describe seems to me that work as such:
Given a problem A, let’s say providing life saving medicine to max number of people, it assumes that letting agents motivated by profit act freely, unrestricted by regulations or policies that even be aimed to try fix problem A, would provide said medicine to more people than an intentional policy of a government that’s trying to provide said medicine to max number of people.
The market doesn’t seem to have a utility function in this model, but any agent in this market (that is able to survive in it) is motivated by an utility function that just wants to maximise profit.
Part of the reason for the assumption that “free market of agents motivated by profit” should be so good at producing solution for problem A (save lives with medicine) is that the “free market” is awesomely good at pricing actions and at finding ways to get profits, because a lot of agents are trying different things at their best to get profit and everything that works get copied. (If anyone has a roughly related theory and feels I butchered or got wrong the reasoning involved, you are welcomed to express it right, I’m genuinely interested).
My main objection to this is that I fail to see how this is different by asking an unaligned AI that’s not super intelligent, but still a lot smarter than you, to get your mother out of a burning building so you’d press the reward button the AI wants you to press.
If I understood your first paragraph correctly, we are both generally skeptic that a market of agents set about to maximise profit would be, on average in many different possible cases, good at generating value that’s different than maximising profit.
Thank you for the clarification between unregulated and free.
I was aware of how one wouldn’t lead to the other, but I’m now unsure about how many of the people I talked to about this had this distinction in mind.
I saw a lots of arguments for deregulation in political press that made appeals to the idea of the “free market”, so I think I usually assumed that one arguing for one of these positions would assume that a free market would be an unregulated one and not foresee this obvious problem.