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This reminds me of a principle I've seen in action many times, which is that usually even seemingly highly invested parties aren't really 'playing for keeps'. T

by taneq 5y ago

This reminds me of a principle I've seen in action many times, which is that usually even seemingly highly invested parties aren't really 'playing for keeps'. Think of heists - if your treasure is worth $X million dollars then you should be prepared for attacks costing $X - $attack_cost. Are you an art thief and is your Van Gough in transit worth $1.5mil? Be pretty dumb not to spend $1mil to recover it for your team of 3, then, right? But nobody does. And nobody spends $1mil to protect said artwork. It's like we collectively agree that official valuations are BS.

aaroninsf 5y ago
This is an interesting idea. I am now curious if there is a formalization of this idea of variable value which seems to be a function of some kind of friction/work requirement. And I imagine is a function of scale relative to the context. What I mean is, if you're an auction house or a major museum, with an operating budget in the $100Ms or more, at some point it is at least cognitively simpler (if not prudent) to accept a certain amount of shrinkage/fraud/loss etc., which you might prevent with even minimal effort, because the minimal effort is too costly in some other way. Cognitively. Administratively. Whatever. I remember learning from relatives who had worked in the FBI that their had been in their day thresholds for what level of check fraud merited investigation. Below a certain level it was not a good use of limited resources to waste time chasing it. This has an interesting follow-on effect, that it was worth consistent effort to obscure that actuality and promote belief in a much more comprehensively aware and interested (and competent) FBI than existed, because that was itself effective in discouraging a certain amount of crime. "Not worth the risk" is miscalculated when you overestimate the risk. And you have little ability to test the system. I find this interesting because it is a reminder that e.g. value is not BS, exactly; but it's multidimensionally contingent and contextual. Which I guess you can see in other places all the time but this is an interesting angle. Not least because it suggests where to look for rich veins of "arbitrage," the places you can exploit differences in relative value. A la Superman III!
thehappypm 5y ago
Risk/reward. Spend $1M on a heist? It better have a 100% chance of working. Any heist can fail, for a number of reasons. Plus the risk side isn’t just financial — jail time is a heavy risk too.
- taneq 5y ago
  > It better have a 100% chance of working. If the reward is $1M. If it's $10m then 10% is worth it. $1B? Why are the many, many billionaires around the world not making this kind of play?
benlivengood 5y ago
Owners of $1.5M artworks buy insurance to cover their theft or destruction for significantly less than $1M, and the insurers do not go bankrupt. As the other commenter points out the expected value of the heist of a $1.5M painting is a lot less than $1M for potential thieves.

by taneq 5y ago

aaroninsf 5y ago

This is an interesting idea. I am now curious if there is a formalization of this idea of variable value which seems to be a function of some kind of friction/work requirement. And I imagine is a function of scale relative to the context. What I mean is, if you're an auction house or a major museum, with an operating budget in the $100Ms or more, at some point it is at least cognitively simpler (if not prudent) to accept a certain amount of shrinkage/fraud/loss etc., which you might prevent with even minimal effort, because the minimal effort is too costly in some other way. Cognitively. Administratively. Whatever. I remember learning from relatives who had worked in the FBI that their had been in their day thresholds for what level of check fraud merited investigation. Below a certain level it was not a good use of limited resources to waste time chasing it. This has an interesting follow-on effect, that it was worth consistent effort to obscure that actuality and promote belief in a much more comprehensively aware and interested (and competent) FBI than existed, because that was itself effective in discouraging a certain amount of crime. "Not worth the risk" is miscalculated when you overestimate the risk. And you have little ability to test the system. I find this interesting because it is a reminder that e.g. value is not BS, exactly; but it's multidimensionally contingent and contextual. Which I guess you can see in other places all the time but this is an interesting angle. Not least because it suggests where to look for rich veins of "arbitrage," the places you can exploit differences in relative value. A la Superman III!

thehappypm 5y ago

Risk/reward. Spend $1M on a heist? It better have a 100% chance of working. Any heist can fail, for a number of reasons. Plus the risk side isn’t just financial — jail time is a heavy risk too.

taneq 5y ago
> It better have a 100% chance of working. If the reward is $1M. If it's $10m then 10% is worth it. $1B? Why are the many, many billionaires around the world not making this kind of play?

benlivengood 5y ago

Owners of $1.5M artworks buy insurance to cover their theft or destruction for significantly less than $1M, and the insurers do not go bankrupt. As the other commenter points out the expected value of the heist of a $1.5M painting is a lot less than $1M for potential thieves.