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For those who like game theory: By doing this they don't have to consider if startups are suitable for follow up investors and thus avoid the Keynesian beauty
by andreasklinger 9y ago
For those who like game theory:
By doing this they don't have to consider if startups are suitable for follow up investors and thus avoid the Keynesian beauty contest problem of not selecting the "prettiest" startup: https://en.wikipedia.org/wiki/Keynesian_beauty_contest https://en.wikipedia.org/wiki/Keynesian_beauty_contest
> "It is not a case of choosing those [faces] that, to the best of one's judgment, are really the prettiest, nor even those that average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practice the fourth, fifth and higher degrees."
- draw_down 9y agoHmm?
- andyidsinga 9y agoit's interesting because each level of indirection is not like a pointer in C but has error associated with it. interesting thought exercise to try to understand the error at each level.
- clock_tower 9y agoI hadn't heard of that before, but I'll keep it in mind for sure. I was going to say that the obvious solution is to not play -- to buy and hold based on fundamental value, and specifically seek out promising but undervalued stocks -- but then, that solution doesn't offer the kind of growth that VC wants, or that a Keynsian beauty contest offers when you win.