OT I've started referring to the "efficient markets hypothesis" as a religion. I promise you, you can show this article to one of those people and they'll construct a story about how this makes perfect sense.
Kon-Peki 4 hours ago [-]
Straight from the mouth of Fama: “efficient Market Hypothesis is a model. All models are wrong. Some models are useful.”
If you don’t/won’t understand the difference between the real world and a model of the real world, there is nothing more to say.
I did not find that quote in the linked-to interview.
The closest is at https://youtu.be/bM9bYOBuKF4?t=148 "That's the statement of the hypothesis, but it's a model, it's not completely true, no models are completely true. They're approximations to the world. The question is, for what purposes are they a good approximation. As far as I'm concerned, they're a good approximation for almost every purpose."
If the interview on YouTube contains your quote, then please link to or give the timestamp. I only skimmed the closed-captions.
jxjnskkzxxhx 3 hours ago [-]
[flagged]
Kon-Peki 3 hours ago [-]
Are you saying Fama didn’t come up with the efficient market hypothesis? He got the Nobel prize for it.
Who came up with it?
jxjnskkzxxhx 3 hours ago [-]
I'm talking about the line you quoted. At this stage I'm convinced you're intentionally equivocating.
quantified 5 hours ago [-]
Humans are too closely related to chimpanzees and Capuchin monkeys to be Homo Economicus. AI will have advantages over humans except that humans still drive the economy and financial activities, and as we've seen with bubbles like real estate and dot-coms, predicting when the stupid ends requires predicting humans.
MarkusQ 6 hours ago [-]
Ok, I'll take a stab at it.
Suppose you had a bunch of decisions that needed to be made, and you would rather that (on average) they were made by smart people rather than dumb people. So you set up a system of tokens, where people with more tokens were allowed to make more of the decisions.
Then all you need is a system whereby smart people wind up with more of the tokens than dumb people. So you set it up that, when a dumb person meets a smart person, the dumb person gives the smart person some of their tokens.
But how are they supposed to know which is which? "Dunning Kruger" and all that seems to doom this plan from the start. But markets always find an answer; what we're seeing here is the efficient market resolving the question for us.
How was that?
jxjnskkzxxhx 5 hours ago [-]
Awful. All these arguments boil down to "a large number of people couldn't possibly make decisions these bad". Can and do.
To be clear, Im not going to continue arguing this point. I find it as dull as trying to convince a fundamentalist that his arguments are circular. That was fun when I was 14 or so, but it's been a long time since.
MarkusQ 5 hours ago [-]
To be clear, I was role playing an efficient market fundamentalist. Or trying to.
And (trying to steelman the argument) was careful to not specify which group of people were making the bad decisions. It is obvious that at least one side of any pure monetization trade like this are making a bad decision (and it could be both; for some such games the only winning move is to refuse to play). So I certainly wasn't claiming that people couldn't make decisions this bad since (as you note) this is clearly counterfactual.
My point is that we're seeing an intersection of "you can't cheat an honest man" and "there's a sucker born every minute," with a touch of "we cheart the other guy and pass the savings on to you"; _everyone_ involves thinks they are making a smart move, and in a case like this at least half of them must be wrong.
FreakLegion 2 hours ago [-]
Your stab was good. Importantly, an efficient market isn't necessarily a rational market. "This is nuts" describes an irrational market, which may or may not be inefficient.
disambiguation 4 hours ago [-]
To engage with the devils advocate:
The problem with the reasoning is, either we already know who's a smart decision maker, in which case the mechanism isn't efficient. or else we don't know, in which case the logic is circular - whoever gets the most tokens must be the best decision maker.
in any case i think all smart decision makers have learned to stay away from crypto.
If you don’t/won’t understand the difference between the real world and a model of the real world, there is nothing more to say.
https://m.youtube.com/watch?v=bM9bYOBuKF4
The closest is at https://youtu.be/bM9bYOBuKF4?t=148 "That's the statement of the hypothesis, but it's a model, it's not completely true, no models are completely true. They're approximations to the world. The question is, for what purposes are they a good approximation. As far as I'm concerned, they're a good approximation for almost every purpose."
I think you've combined that with the aphorism commonly associated with George Box - https://en.wikipedia.org/wiki/All_models_are_wrong .
If the interview on YouTube contains your quote, then please link to or give the timestamp. I only skimmed the closed-captions.
Who came up with it?
Suppose you had a bunch of decisions that needed to be made, and you would rather that (on average) they were made by smart people rather than dumb people. So you set up a system of tokens, where people with more tokens were allowed to make more of the decisions.
Then all you need is a system whereby smart people wind up with more of the tokens than dumb people. So you set it up that, when a dumb person meets a smart person, the dumb person gives the smart person some of their tokens.
But how are they supposed to know which is which? "Dunning Kruger" and all that seems to doom this plan from the start. But markets always find an answer; what we're seeing here is the efficient market resolving the question for us.
How was that?
To be clear, Im not going to continue arguing this point. I find it as dull as trying to convince a fundamentalist that his arguments are circular. That was fun when I was 14 or so, but it's been a long time since.
And (trying to steelman the argument) was careful to not specify which group of people were making the bad decisions. It is obvious that at least one side of any pure monetization trade like this are making a bad decision (and it could be both; for some such games the only winning move is to refuse to play). So I certainly wasn't claiming that people couldn't make decisions this bad since (as you note) this is clearly counterfactual.
My point is that we're seeing an intersection of "you can't cheat an honest man" and "there's a sucker born every minute," with a touch of "we cheart the other guy and pass the savings on to you"; _everyone_ involves thinks they are making a smart move, and in a case like this at least half of them must be wrong.
The problem with the reasoning is, either we already know who's a smart decision maker, in which case the mechanism isn't efficient. or else we don't know, in which case the logic is circular - whoever gets the most tokens must be the best decision maker.
in any case i think all smart decision makers have learned to stay away from crypto.