Back in ’84, when I first started to work at Lockheed Missiles & Space Company, I recall a manager complaining that their US government customer would not accept using decision theory to estimate the optimal thickness of missile walls; they insisted instead on using a crude heuristic expressed in terms of standard deviations of noise. Complex decision theory methods were okay to use for more detailed choices, but not for the biggest ones.
That's true, and that's why I use them more for predictive purposes (e.g. are we going to have war with Iran? Is coronavirus going to turn into an SF style plague? etc.) than all of the talking heads. The talking heads generally have them up their asses.
I wonder if the aversion to quantifying important decisions comes from an intuitive understanding of Goodhart's law. Maybe people understand that the more things you measure, the more targets you create, and that creating a good target is much harder than getting a worthwhile measurement. Not that every measurement becomes a target, just that the more you have to choose from the larger your temptation to start using them that way. I don't think this competes very much with your explanation, but I wonder what you think of it.
There would seem to be less opportunity for political dysfunctions in small companies. Do they use decision theory for important decisions more often than large companies?
Ordinary stock markets ARE prediction markets, and many private investment venues try to structure investment choices similarly. So formal decisions markets don't have much to add there.
Would not an investment fund earn a higher rate of return if it made its investments based on prediction markets? Likewise, since investors are always looking for greater returns, should not the resulting competition for returns drive more companies to adopt more effective decision methods such as decision theory and the like? Your arguments about firm inefficiency and the political aspects of it are quite valid. But its a "red queen" competitive world out there and such competitive pressure should erode these influences. Perhaps its the plentiful money we've seen from the FED over the past 25 years that has allowed for this kind of slop to continue to exist in the system. Once the cheap capital goes away (mass retirement of boomers?) then darwinian competitive pressure takes over and the political reticence against adoption of decision theory, prediction markets, and other methods that improve firm efficiency will go away. As Warren Buffet likes to say, "When the tide goes out, you get to see who's swimming without a swimsuit.".
One would think so. That fact this has not happened suggests that rot, corruption, and inefficiencies coming from such are so endemic to the system that there is no hope. It also suggests that, if we really do get true AGI, the existing system will be rendered obsolete in a competitive sense in nearly a heartbeat.
Given the huge compensation that executives make these days, it would make sense to eliminate them with decision theory based analytics. Given the increased profitability of such, this would be a win for investors such as myself as well.
Minimization of blameworthiness in perverse hierarchies dictates carefully (incl. doublethink to avoid explicit knowledge) *insulating* yourself from information. Relevant from just the other day: https://carcinisation.com/2...
It's also Putt's First Law of Decision Making: Managers make decisions. (Therefore, anything that threatens their ability to make arbitrary decisions threatens their job, and will not be approved or implemented.)
Why do you believe this? I feel like most of my own resistance (in small and large, personal and professional affairs) comes solely from Goodhart.
Very hopeful of being convinced to the contrary.
That's true, and that's why I use them more for predictive purposes (e.g. are we going to have war with Iran? Is coronavirus going to turn into an SF style plague? etc.) than all of the talking heads. The talking heads generally have them up their asses.
The fixed cost to do an analysis will push the other direction.
It is a real effect, worth taking into account, but it is mostly an excuse re measuring more.
I wonder if the aversion to quantifying important decisions comes from an intuitive understanding of Goodhart's law. Maybe people understand that the more things you measure, the more targets you create, and that creating a good target is much harder than getting a worthwhile measurement. Not that every measurement becomes a target, just that the more you have to choose from the larger your temptation to start using them that way. I don't think this competes very much with your explanation, but I wonder what you think of it.
There would seem to be less opportunity for political dysfunctions in small companies. Do they use decision theory for important decisions more often than large companies?
Ordinary stock markets ARE prediction markets, and many private investment venues try to structure investment choices similarly. So formal decisions markets don't have much to add there.
Would not an investment fund earn a higher rate of return if it made its investments based on prediction markets? Likewise, since investors are always looking for greater returns, should not the resulting competition for returns drive more companies to adopt more effective decision methods such as decision theory and the like? Your arguments about firm inefficiency and the political aspects of it are quite valid. But its a "red queen" competitive world out there and such competitive pressure should erode these influences. Perhaps its the plentiful money we've seen from the FED over the past 25 years that has allowed for this kind of slop to continue to exist in the system. Once the cheap capital goes away (mass retirement of boomers?) then darwinian competitive pressure takes over and the political reticence against adoption of decision theory, prediction markets, and other methods that improve firm efficiency will go away. As Warren Buffet likes to say, "When the tide goes out, you get to see who's swimming without a swimsuit.".
One would think so. That fact this has not happened suggests that rot, corruption, and inefficiencies coming from such are so endemic to the system that there is no hope. It also suggests that, if we really do get true AGI, the existing system will be rendered obsolete in a competitive sense in nearly a heartbeat.
I worked for a business owner who used to say "you can't manage what you can't measure".
Given the huge compensation that executives make these days, it would make sense to eliminate them with decision theory based analytics. Given the increased profitability of such, this would be a win for investors such as myself as well.
LessWrong also has a pretty great review of How To Measure Anything here: https://www.lesswrong.com/posts/ybYBCK9D7MZCcdArB/how-to-measure-anything
http://www.overcomingbias.c...
"Apparently most for-profit firms could make substantially more profits if only they’d use simple decision theory to analyze key decisions."
Is this plausible? Shouldn't firms which employ decision theory come to dominate those who use the "inferior" methods?
Minimization of blameworthiness in perverse hierarchies dictates carefully (incl. doublethink to avoid explicit knowledge) *insulating* yourself from information. Relevant from just the other day: https://carcinisation.com/2...
It's also Putt's First Law of Decision Making: Managers make decisions. (Therefore, anything that threatens their ability to make arbitrary decisions threatens their job, and will not be approved or implemented.)