I disagree with the author's first point–that the decrease in profitability of eBay middlemen due to more efficient algorithmic arbitrageurs is an example of overoptimization, creating negative social consequences through "hurting buyers by eliminating uncertainty that sometimes results in lower-than-optimal-to-sellers prices."
In this example, these "lower-than-optimal" prices weren't passed on to the end consumers in the first place–instead, arbitrageurs like the author's friend would take advantage of them to gain a profit. The end prices that the average, uninformed buyer would see would therefore be inflated, with traders like the author's friend taking their cut.
Sure, the rise of more efficient, algorithmic players decreased the profitability of less sophisticated middlemen like the author's friend. But, since these algorithmic players were more efficient, they were able to take less of a cut, leading to lower prices (and overall benefit) for the average buyer.
Nevermark 3 days ago [-]
Agreed. Raising a price to its optimum level is what markets do for a good reason: reserving goods for those who actually want them the most.
It is true a more efficient market would have original sellers finding that optimal sale price, but when they can’t, getting some “help” from resellers does maximize value to buyers by sending goods where they are most appreciated or needed.
And resellers also signal to anyone paying attention, the true value of goods. So sellers that look around have an easier time choosing optimal pricing as well.
If sellers need more sophisticated tools to do that, that would seem like a net positive business opportunity for a seller or reseller to create those tools for others to use.
But complaining that less efficient markets had advantages to particular people, while ignoring that optimal pricing is THE core service open markets provide to allocate goods to everyone’s overall greatest benefit, doesn’t make sense.
392 3 days ago [-]
Did the crap people didn't need in these eBay listings improve the world with their lower prices? I don't think folks are buying groceries there.
DarkNova6 4 days ago [-]
A much more interesting article than the title alone alludes to (unrelated to code).
See his definition of overoptimization:
> My current working definition of overoptimization goes like this: overoptimization has occurred when the introduction of immense amounts of information into a human system produces conditions that allow for some players within that system to maximize their comparative advantage, without overtly breaking the rules, in a way that (intentional or not) creates meaningful negative social consequences. I want to argue that many human systems in the 2020s have become overoptimized in this way, and that the social ramifications are often bad
pixl97 4 days ago [-]
>without overtly breaking the rules
Well, I'd add, and break the rules (Realpage).
I'd say the modern system is closer to a perfect information system, but asymmetries in that system allow the players capable of raising the most capital to purchase any players that are undercapitalized. With the consolidation of players and the dependence on overcapitalization the remaining players in the market keep prices high via instantly communicated retail prices on websites. Lowering prices will most likely not gain long term customers, only short term customers feeding on the lower prices, and will likely lead to reduced profitability for that quarter.
pixl97 4 days ago [-]
Not mentioned here: Realpage. Things like this have worked to tip the power of information towards the landlord and with collusion raise the price of rentals for everyone.
But on to the first point of the article. Back in the early 2000s used to shop stores, especially Goodwill and hock the stuff out on ebay. It's nearly impossible to do that for two reasons now. One, goodwill will sell the product online for closer to optimal price taking as much profit as possible, or Two, the employees there snag any decent items they get and sell them online.
JZL003 4 days ago [-]
Another example which I once posed to a regulator, is satellite information as public permitted insider trading. There are firms who buy satellites imagery (only available commerically, or even paying for a satellite to go to certain locations) to look at the shadows oil storage containers. You can see the relative levels of oil storage to predict the oil market. This is vaguely solvable by adding a false ceiling
But more pernicious, check target parking lots to see how full they are, to predict approximate target's profit before their quarterly releases.
Nominally this is totally public knowledge, but unless you can afford to pay for commercial imagery (or rent where it points) you would never know. Is that really a public market with globally relatively-equivalent knowledge
tekne 4 days ago [-]
Counterpoint: isn't this exactly the _point_ of high-medium frequency trading (vs. investment) in the first place? That is, to incentivize people to search for and analyze information in a novel fashion and provide this information to the market through pricing? I feel insider trading itself is not an equality problem, but rather a conflict-of-interest problem, after all (especially if it's, e.g., someone working at a regulator doing the insider trading).
Nevermark 3 days ago [-]
Exactly! Reselling at a better estimates of real value make a market more efficient.
In two ways. The immediate is when they buy or sell a miss-priced asset, the other side of the trade benefits from a slightly more accurate price.
Then the market as a whole benefits from reduced risk, as the miss-pricing gets reduced. Whether or not each individual buys, sells, or abstained based on the more accurate valuation.
—
The problem with insiders isn’t that they have unique information on miss-pricing, and are trading on it.
It is that, one, if they are allowed to trade on miss-pricing they are highly incentivized to create it.
And two, they are leveraging the shareholder’s property, the company’s private information, against the shareholders. Despite insiders only having been been given access to that information, explicitly or opportunistically, in order to provide benefits to the shareholders.
mst 4 days ago [-]
The tinder guide link shows an interesting failure mode (if true) -
It ranks more attractive men higher
Women see those first
The most attractive men are mostly there for casual sex
They get so many matches they can afford to be blatant and not necessarily polite
Women there for relationships get tired of being hit on for casual sex
Men lower down the attractiveness range but actually wanting a relationship are never seen by those women unless they swipe past the hot mansluts
Men ignored, the women who might have been interested in them leave
(the author of said link is pretty clear he thinks this sucks for everybody and thinks it's entirely fair for the women to bail out on their crap experience, so ... plausible)
klyrs 3 days ago [-]
> he thinks this sucks for everybody
Works out pretty well for the hot mansluts! Won't somebody please think of the... sorry, nevermind. Yeah, tinder is shit, and it doesn't seem like most dating apps are much better.
koliber 4 days ago [-]
The author observes a phenomenon that is definitely happening but calls it an incorrect name. It’s not over optimization. People are becoming richer and more people want access to things that were once exclusive. More people can afford that as well. Whether you call it “things got less expensive” or “more people got richer” is relative. The point is more people are competing for fewer resources.
The author makes this sound like a bad thing. Often it does feel like that. On the other hand, more people are able to spend leisure time in places that were once only accessible to the rich. Is that bad? Not in my book. Does it cause crowds when taking the coveted Santorini sunset photo? You betcha.
Rendered at 05:14:45 GMT+0000 (Coordinated Universal Time) with Vercel.
In this example, these "lower-than-optimal" prices weren't passed on to the end consumers in the first place–instead, arbitrageurs like the author's friend would take advantage of them to gain a profit. The end prices that the average, uninformed buyer would see would therefore be inflated, with traders like the author's friend taking their cut.
Sure, the rise of more efficient, algorithmic players decreased the profitability of less sophisticated middlemen like the author's friend. But, since these algorithmic players were more efficient, they were able to take less of a cut, leading to lower prices (and overall benefit) for the average buyer.
It is true a more efficient market would have original sellers finding that optimal sale price, but when they can’t, getting some “help” from resellers does maximize value to buyers by sending goods where they are most appreciated or needed.
And resellers also signal to anyone paying attention, the true value of goods. So sellers that look around have an easier time choosing optimal pricing as well.
If sellers need more sophisticated tools to do that, that would seem like a net positive business opportunity for a seller or reseller to create those tools for others to use.
But complaining that less efficient markets had advantages to particular people, while ignoring that optimal pricing is THE core service open markets provide to allocate goods to everyone’s overall greatest benefit, doesn’t make sense.
See his definition of overoptimization:
> My current working definition of overoptimization goes like this: overoptimization has occurred when the introduction of immense amounts of information into a human system produces conditions that allow for some players within that system to maximize their comparative advantage, without overtly breaking the rules, in a way that (intentional or not) creates meaningful negative social consequences. I want to argue that many human systems in the 2020s have become overoptimized in this way, and that the social ramifications are often bad
Well, I'd add, and break the rules (Realpage).
I'd say the modern system is closer to a perfect information system, but asymmetries in that system allow the players capable of raising the most capital to purchase any players that are undercapitalized. With the consolidation of players and the dependence on overcapitalization the remaining players in the market keep prices high via instantly communicated retail prices on websites. Lowering prices will most likely not gain long term customers, only short term customers feeding on the lower prices, and will likely lead to reduced profitability for that quarter.
But on to the first point of the article. Back in the early 2000s used to shop stores, especially Goodwill and hock the stuff out on ebay. It's nearly impossible to do that for two reasons now. One, goodwill will sell the product online for closer to optimal price taking as much profit as possible, or Two, the employees there snag any decent items they get and sell them online.
But more pernicious, check target parking lots to see how full they are, to predict approximate target's profit before their quarterly releases.
Nominally this is totally public knowledge, but unless you can afford to pay for commercial imagery (or rent where it points) you would never know. Is that really a public market with globally relatively-equivalent knowledge
In two ways. The immediate is when they buy or sell a miss-priced asset, the other side of the trade benefits from a slightly more accurate price.
Then the market as a whole benefits from reduced risk, as the miss-pricing gets reduced. Whether or not each individual buys, sells, or abstained based on the more accurate valuation.
—
The problem with insiders isn’t that they have unique information on miss-pricing, and are trading on it.
It is that, one, if they are allowed to trade on miss-pricing they are highly incentivized to create it.
And two, they are leveraging the shareholder’s property, the company’s private information, against the shareholders. Despite insiders only having been been given access to that information, explicitly or opportunistically, in order to provide benefits to the shareholders.
It ranks more attractive men higher
Women see those first
The most attractive men are mostly there for casual sex
They get so many matches they can afford to be blatant and not necessarily polite
Women there for relationships get tired of being hit on for casual sex
Men lower down the attractiveness range but actually wanting a relationship are never seen by those women unless they swipe past the hot mansluts
Men ignored, the women who might have been interested in them leave
(the author of said link is pretty clear he thinks this sucks for everybody and thinks it's entirely fair for the women to bail out on their crap experience, so ... plausible)
Works out pretty well for the hot mansluts! Won't somebody please think of the... sorry, nevermind. Yeah, tinder is shit, and it doesn't seem like most dating apps are much better.
The author makes this sound like a bad thing. Often it does feel like that. On the other hand, more people are able to spend leisure time in places that were once only accessible to the rich. Is that bad? Not in my book. Does it cause crowds when taking the coveted Santorini sunset photo? You betcha.