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I'm surprised that nobody links to the best proposed solution to this problem, so I will: https://mason.gmu.edu/~rhanson/dumpceo.html https://mason.gmu.edu/~rh

by nmca 4y ago

I'm surprised that nobody links to the best proposed solution to this problem, so I will: https://mason.gmu.edu/~rhanson/dumpceo.html https://mason.gmu.edu/~rhanson/dumpceo.html The US could, if it was inclined, legalise prediction markets & investors could subsidise markets for stock price conditional on the CEO stepping down, thus revealing in the strongest possible wisdom-of-the-market sense whether the CEO is going a good job. This would solve the problem modulo short term inneficiencies and be much better than the status quo.

j0hnyl 4y ago
there would need heavy moderation in order to avoid nefarious things like contract killings
- deleted 4y ago
  [deleted]
- nmca 4y ago
  Pasting section 4.2 of this prediction market faq: https://astralcodexten.substack.com/p/prediction-market-faq https://astralcodexten.substack.com/p/prediction-market-faq "What about the risk of insider trading by committing harmful / illegal acts? That is, could President Biden’s doctor decide to poison him, then make money when he has to resign due to ill health? I think the strongest evidence against is that this basically never happens in stock markets. Tesla stock would plummet if Elon Musk died or resigned, but nobody realistically worries that Musk’s doctor will short Tesla and poison him. Lots of corporations’ stocks would sink to zero if you burned down their offices and factories, but nobody shorts them and then commits arson. Probably this is because there are laws against doing harmful and illegal things, and people have decided that stock market gains aren’t worth breaking the law and getting punished. Since prediction markets have only a tiny fraction of the amount of money that stock markets do, probably people won’t consider it worthwhile to commit harmful actions to manipulate them either. If you were going to murder someone to profit off a market, who would you rather kill: a US politician (the PredictIt market on the presidential election has a volume of about $600,000)? Or a Fortune 500 CEO (whose companies might have market caps in the hundreds of billions)?" Of course see also the rest of that FAQ, it's all great.

by nmca 4y ago

j0hnyl 4y ago

there would need heavy moderation in order to avoid nefarious things like contract killings

deleted 4y ago
[deleted]
nmca 4y ago
Pasting section 4.2 of this prediction market faq: https://astralcodexten.substack.com/p/prediction-market-faq https://astralcodexten.substack.com/p/prediction-market-faq "What about the risk of insider trading by committing harmful / illegal acts? That is, could President Biden’s doctor decide to poison him, then make money when he has to resign due to ill health? I think the strongest evidence against is that this basically never happens in stock markets. Tesla stock would plummet if Elon Musk died or resigned, but nobody realistically worries that Musk’s doctor will short Tesla and poison him. Lots of corporations’ stocks would sink to zero if you burned down their offices and factories, but nobody shorts them and then commits arson. Probably this is because there are laws against doing harmful and illegal things, and people have decided that stock market gains aren’t worth breaking the law and getting punished. Since prediction markets have only a tiny fraction of the amount of money that stock markets do, probably people won’t consider it worthwhile to commit harmful actions to manipulate them either. If you were going to murder someone to profit off a market, who would you rather kill: a US politician (the PredictIt market on the presidential election has a volume of about $600,000)? Or a Fortune 500 CEO (whose companies might have market caps in the hundreds of billions)?" Of course see also the rest of that FAQ, it's all great.