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That works for ebay because it is very simple to determine if you got the result you wanted. Case A: You get the correct product, it is working. Case B: Didn't

That works for ebay because it is very simple to determine if you got the result you wanted. Case A: You get the correct product, it is working. Case B: Didn't get product, doesn't work, etc... A gets +1, B gets -1. Simple to judge for 99% of people. More complex things, like medicine or law or even wiring electrics in a house, the consumer is completely incapable of determining if the service they got is good, because they don't understand it well enough to judge. This is why reputation systems won't work for anything more complex than ebay. Studies already show doctors get judged mostly by how nice they are. Sure, a reputation system might help you find the nicest doctor, but that isn't whats important right?

CryptoPunk 8y ago
This is a common argument for having government take over, but it's unsubstantiated in my opinion. For example, an automobile is an extremely complex product where the outcome of a purchase takes years to materialize, and yet we have highly developed market-based mechanisms for ascertaining the quality of automobiles. Bottom-up decentralized processes disseminate correct information very efficiently. Wikipedia would be a good example of that. Anyone can quickly find a reasonably good answer on almost any issue, of any level of complexity, using a Google search to return the top Wikipedia page on it. >>Studies already show doctors get judged mostly by how nice they are. That doesn't tell us much. The quality of doctors may already be assured by the overly stringent licensing process, and price is made a non-factor by insurance/government coverage, so consumers look for signs of empathy, as its the only other relevant variable and the only one that they control. While there's no indication that reputation markets don't work, there's plenty of evidence that government take-over of industries turns out just as classical economic theory would predict: disastrously. One major case is healthcare: in every developed country over the last 50 years, government regulation and control of healthcare has massively increased, and this as corresponded with substantial increases in healthcare expenditure as a percentage of GDP. In the US for example, the number of hospital administrators increased 3,200% between 1975 and 2010, compared to a 150% increase in physicians, and this increasing inefficiency is due to an increasing number of regulations: https://www.athenahealth.com/insight/expert-forum-rise-and-rise-healthcare-administrator https://www.athenahealth.com/insight/expert-forum-rise-and-r...

CryptoPunk 8y ago

This is a common argument for having government take over, but it's unsubstantiated in my opinion. For example, an automobile is an extremely complex product where the outcome of a purchase takes years to materialize, and yet we have highly developed market-based mechanisms for ascertaining the quality of automobiles. Bottom-up decentralized processes disseminate correct information very efficiently. Wikipedia would be a good example of that. Anyone can quickly find a reasonably good answer on almost any issue, of any level of complexity, using a Google search to return the top Wikipedia page on it. >>Studies already show doctors get judged mostly by how nice they are. That doesn't tell us much. The quality of doctors may already be assured by the overly stringent licensing process, and price is made a non-factor by insurance/government coverage, so consumers look for signs of empathy, as its the only other relevant variable and the only one that they control. While there's no indication that reputation markets don't work, there's plenty of evidence that government take-over of industries turns out just as classical economic theory would predict: disastrously. One major case is healthcare: in every developed country over the last 50 years, government regulation and control of healthcare has massively increased, and this as corresponded with substantial increases in healthcare expenditure as a percentage of GDP. In the US for example, the number of hospital administrators increased 3,200% between 1975 and 2010, compared to a 150% increase in physicians, and this increasing inefficiency is due to an increasing number of regulations: https://www.athenahealth.com/insight/expert-forum-rise-and-rise-healthcare-administrator https://www.athenahealth.com/insight/expert-forum-rise-and-r...