Adding more people (or more chaos in general), works in systems that are anti-fragile, that is they’re set up to actually gain from disorder. This may seen tautological, but in the above post I give 6 principles that make a system antifragile:
Optionality: You tend to choose options that give you more options in the future.
Hormesis: When bad outcomes befall you, you work to be more robust to that class of outcomes in the future.
Evolution: You’re constantly creating multiple variations , and keeping those that survive over time.
The Barbell Strategy: You split your activities that are very safe, with low downside, and those that are very risky, with high upside.
Via Negativa: You work to remove sources of downside risk before you work to increase upside risk.
Skin in the Game: People and organizations are exposed to the downside risk that they create.
To the extent that a system follows the six principles above, adding more people to the system will tend to make it do better—capitalism for instance follows the evolution and optionality strategies, but as the economy becomes increasingly centralized, it tends to fail at the others to varying degrees, as people have pointed out.
Prediction Markets are antifragile only when they have liquidity, which provides them much needed optionality. When they are liquid, they use evolution and skin in the game principles to over time have traders that follow the other strategies.
Adding more people (or more chaos in general), works in systems that are anti-fragile, that is they’re set up to actually gain from disorder. This may seen tautological, but in the above post I give 6 principles that make a system antifragile:
Optionality: You tend to choose options that give you more options in the future.
Hormesis: When bad outcomes befall you, you work to be more robust to that class of outcomes in the future.
Evolution: You’re constantly creating multiple variations , and keeping those that survive over time.
The Barbell Strategy: You split your activities that are very safe, with low downside, and those that are very risky, with high upside.
Via Negativa: You work to remove sources of downside risk before you work to increase upside risk.
Skin in the Game: People and organizations are exposed to the downside risk that they create.
To the extent that a system follows the six principles above, adding more people to the system will tend to make it do better—capitalism for instance follows the evolution and optionality strategies, but as the economy becomes increasingly centralized, it tends to fail at the others to varying degrees, as people have pointed out.
Prediction Markets are antifragile only when they have liquidity, which provides them much needed optionality. When they are liquid, they use evolution and skin in the game principles to over time have traders that follow the other strategies.