3 ms·

> as long as the consumers and producers have the right information Honest question: what is "the right information"? Unless you want someone choosing what is

by kibwen 2y ago

> as long as the consumers and producers have the right information Honest question: what is "the right information"? Unless you want someone choosing what is and is not the right information, which feels like market distortion, then "the right information" becomes "all possible information". And in practice, we as consumers don't even have a thousandth of "all the information", let alone a hundredth, let alone half. (For example, where can I look up the details of the entire supply chain of this phone in my hand, for every single material input it requires, to know what degree I'm culpable in supporting slave labor, which is something that would influence my purchasing decision?) And then even if we gave someone all the information, or even some useful approximation of all the information, are humans even capable of using that to make decisions that are informed enough to allow markets to approach any sort of rationality? Given finite time, isn't it possible that the amount of time required to make a single informed decision is longer than a lifespan? So then the question is, if useful amounts of information are neither practically available nor practically actionable, what might that imply about our absolute faith in market mechanisms that require the right information to operate efficiently?

emmelaich 2y ago
By "right" I mean roughly correct. To your other points I suspect that close to correct is often enough and is more correct over time. But this is where research should be directed I suppose.
btilly 2y ago
I can make it worse. We make decisions based on partial information, processed in a probabilistic manner. The logically right way to reason involves the update of a Bayesian network - each belief ties to each other belief. But updating a Bayesian network - even approximately, is an NP complete problem. So we not only can't make a correct decision, we can't even try to approximate it in reasonable time. We can only apply crappy heuristics. Like, "Are you with me or against me?" Hence political alignment replaces our decision making. Even for apparently pure economic decisions.
aaroninsf 2y ago
"Right" is alas undefined and undefinable, not least as "consumers" idon't make economic decisions wrt to some a priori set of N weighted dimensions within which a gradient of desirability is defined, or in fact by any set of such dimensions. They mostly make discretionary decisions wrt to a set of influences triggers habits and cues most of which are not about information or rational processes. A hobby horse is that an increasing number of these are manipulated by those in a market with the resources to identify exploit them. This is not uniquely the case for those making discretionary spending decisions... but it for those of us, that dissatisfaction—or dis-satiation—seems to perpetually "find its level." (I.e. the post-orgasmic clarify of the satisfaction of the craving, soon evaporates like the dew.) The phenomenon of perpetual unsatisfiable desire for the Next Thing is so ubiquitous and accepted we don't even attend to it any longer; and so baked in that 2500 year old Greek myth gives us well-known parables (c.f. the myth of Tantalus). Related: so, GLP-1 drugs like Ozempic have had discernible macroscopic impacts on "consumption" across many economic categories, enough so that the Economist magazine had a story IIRC on unease in industries most obviously based on addictive behavior. I am curious whether there has been a partiuclarly-discernible impact in "expensive hobbies" defined by constant pursuit of the Next Better Thing e.g. audiophiles, collectors, constant-tinker hobbies like mechanical keyboards, modular synthesizers, etc.. The battle in the heavens of our psyches may be waged for the next period between GLP-1 agents on the one hand, and exploitation of ML on the other, uniquely powerful tool as it is for identifying and tuning efficacious triggers for addictive behavior.
cratermoon 2y ago
> if useful amounts of information are neither practically available nor practically actionable, what might that imply about our absolute faith in market mechanisms that require the right information to operate efficiently? See e.g. Akerlof, George A. (1970). "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism" Akerlof shared the 2001 Nobel Prize in Economic Sciences with A. Michael Spence and Joseph E. Stiglitz for work on the impact of information asymmetry on markets.
Veserv 2y ago
It implies that you do not get absolutely 100% perfect allocation where everybody is maximally happy according to their constraints which is what "efficiently" means in that context. That is also a useless and impractical standard to hold any system to as any optimization problem is impossible if you have missing non-degenerate constraints/information. In practice, the question becomes what systems result in the best outcomes given normal conditions and information. As a example, we see that total command economies are dramatically worse than markets at normal amounts of information. Alternatively, how can conditions be changed in normal fashions that can be consistently enforced to maximize system outcomes. Things are further confused by the fact that we have a very poor understanding of even the implemented systems. What aspects are important, what are not? For instance, we can see that the modern Chinese economy is clearly more market-driven than previously, so the increased amount of market economics has been a dramatic improvement. Clearly, they were previously on the "too little market" side of that equation. In many ways, their markets are more "unrestricted" than the USA, but in others less, are they more market-driven than the USA or not? Are the ways in which they are important, are the ways in which they are not important? About the only thing we can really categorize are directional changes from a previous status quo and maybe we can categorize transformative impacts after the fact. It is these sorts of questions and observations that matter. Quibbling about how a system is imperfect in a wholly impractical limit to argue against practical matters is just silly especially when those same problems are held by literally everything.

by kibwen 2y ago

emmelaich 2y ago

By "right" I mean roughly correct. To your other points I suspect that close to correct is often enough and is more correct over time. But this is where research should be directed I suppose.

btilly 2y ago

I can make it worse. We make decisions based on partial information, processed in a probabilistic manner. The logically right way to reason involves the update of a Bayesian network - each belief ties to each other belief. But updating a Bayesian network - even approximately, is an NP complete problem. So we not only can't make a correct decision, we can't even try to approximate it in reasonable time. We can only apply crappy heuristics. Like, "Are you with me or against me?" Hence political alignment replaces our decision making. Even for apparently pure economic decisions.

aaroninsf 2y ago

"Right" is alas undefined and undefinable, not least as "consumers" idon't make economic decisions wrt to some a priori set of N weighted dimensions within which a gradient of desirability is defined, or in fact by any set of such dimensions. They mostly make discretionary decisions wrt to a set of influences triggers habits and cues most of which are not about information or rational processes. A hobby horse is that an increasing number of these are manipulated by those in a market with the resources to identify exploit them. This is not uniquely the case for those making discretionary spending decisions... but it for those of us, that dissatisfaction—or dis-satiation—seems to perpetually "find its level." (I.e. the post-orgasmic clarify of the satisfaction of the craving, soon evaporates like the dew.) The phenomenon of perpetual unsatisfiable desire for the Next Thing is so ubiquitous and accepted we don't even attend to it any longer; and so baked in that 2500 year old Greek myth gives us well-known parables (c.f. the myth of Tantalus). Related: so, GLP-1 drugs like Ozempic have had discernible macroscopic impacts on "consumption" across many economic categories, enough so that the Economist magazine had a story IIRC on unease in industries most obviously based on addictive behavior. I am curious whether there has been a partiuclarly-discernible impact in "expensive hobbies" defined by constant pursuit of the Next Better Thing e.g. audiophiles, collectors, constant-tinker hobbies like mechanical keyboards, modular synthesizers, etc.. The battle in the heavens of our psyches may be waged for the next period between GLP-1 agents on the one hand, and exploitation of ML on the other, uniquely powerful tool as it is for identifying and tuning efficacious triggers for addictive behavior.

cratermoon 2y ago

> if useful amounts of information are neither practically available nor practically actionable, what might that imply about our absolute faith in market mechanisms that require the right information to operate efficiently? See e.g. Akerlof, George A. (1970). "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism" Akerlof shared the 2001 Nobel Prize in Economic Sciences with A. Michael Spence and Joseph E. Stiglitz for work on the impact of information asymmetry on markets.

Veserv 2y ago

It implies that you do not get absolutely 100% perfect allocation where everybody is maximally happy according to their constraints which is what "efficiently" means in that context. That is also a useless and impractical standard to hold any system to as any optimization problem is impossible if you have missing non-degenerate constraints/information. In practice, the question becomes what systems result in the best outcomes given normal conditions and information. As a example, we see that total command economies are dramatically worse than markets at normal amounts of information. Alternatively, how can conditions be changed in normal fashions that can be consistently enforced to maximize system outcomes. Things are further confused by the fact that we have a very poor understanding of even the implemented systems. What aspects are important, what are not? For instance, we can see that the modern Chinese economy is clearly more market-driven than previously, so the increased amount of market economics has been a dramatic improvement. Clearly, they were previously on the "too little market" side of that equation. In many ways, their markets are more "unrestricted" than the USA, but in others less, are they more market-driven than the USA or not? Are the ways in which they are important, are the ways in which they are not important? About the only thing we can really categorize are directional changes from a previous status quo and maybe we can categorize transformative impacts after the fact. It is these sorts of questions and observations that matter. Quibbling about how a system is imperfect in a wholly impractical limit to argue against practical matters is just silly especially when those same problems are held by literally everything.