What are some examples of this algorithm being inaccurate? It seems awfully like the efficient market hypothesis to me. (I don’t particularly believe in EMH, but it’s an accurate enough heuristic.)
In principle I agree with Villiam, though often these situations are sufficiently unlike markets that thinking of it in EMH terms will lead intuitions astray. So I’ll emphasize some other aspects (though it’s still useful to consider how the aspects below generalize to other EMH arguments).
Situations where all out attacks work are usually situations where people nominally trying to do the thing are not actually trying to do the thing. This is often for typical Inadequate Equilibria reasons—i.e. people are rewarded for looking like they’re making effort, rather than for success, because it’s often a lot easier to verify that people look-like-they’re-making-effort than that they’re actually making progress.
I think this happens a lot more in everyday life than people realize/care to admit: employers in many areas will continue to employ employees without complaint as long as it looks like they’re trying to do The Thing, even if The Thing doesn’t get done very quickly/very well—there just needs to be a plausible-sounding argument that The Thing is more difficult than it looks. (I’ve worked in several tech startups, and this incentive structure applied to basically everyone.) Whether consciously or unconsciously, a natural result is that employees don’t really put forth their full effort to finish things as quickly and perfectly as possible; there’s no way for the employer to know that The Thing could have been done faster/better.
(Thought experiment: would you do your job differently if you were going to capture the value from the product for yourself, and wouldn’t get paid anything besides that?)
The whole status-attack problem slots neatly into this sort of scenario: if I come along and say that I can do The Thing in half the time and do a better job of it too, then obviously that’s going to come across as an attack on whoever ’s busy looking-like-they’re-doing The Thing.
It seems awfully like the efficient market hypothesis to me.
Then the reasoning wouldn’t apply when the “market” is not efficient. For example, when something cannot be bought or sold, when the information necessary to determine the price is not publicly available, when the opportunity to buy or sell is limited to a few people (so the people with superior knowledge of market situation cannot participate), and when the people who buy or sell have other priorities stronger than being right (for example a tiny financial profit caused by being right would be balanced by a greater status loss).