Another category of what I suspect are increasing returns come from ceiling effects: if there is a ceiling, and you hit the ceiling, a rational observer will infer that your true value is noticeably higher than the ceiling. The lower the ceiling, the more the relative inflation. So you get an effect where returns are diminishing from 97% → 98% → 99%, but then at 99% → 100% there’s a sudden spike.
I’ve wondered if this is responsible for an apparent effect where adding a little bit of polish to a nearly-perfect design has an outsized impact compared to the naive diminishing-returns expectation of that polish being invisible.
Another category of what I suspect are increasing returns come from ceiling effects: if there is a ceiling, and you hit the ceiling, a rational observer will infer that your true value is noticeably higher than the ceiling. The lower the ceiling, the more the relative inflation. So you get an effect where returns are diminishing from 97% → 98% → 99%, but then at 99% → 100% there’s a sudden spike.
I’ve wondered if this is responsible for an apparent effect where adding a little bit of polish to a nearly-perfect design has an outsized impact compared to the naive diminishing-returns expectation of that polish being invisible.